Corporate Affairs Commission V. Mr. Taiwo Ayedun (2005)

LawGlobal-Hub Lead Judgment Report

MARY PETER-ODILI, J.C.A. 

This is an appeal against the Ruling of the Hon. Justice Stephen Jonah Adah of the Federal High Court, Abuja, delivered on May 22nd, 2003, granting an order of mandamus at the plaintiff’s/respondent’s instance against the appellant, directing the appellant to apply to court for directions on the issue of refusal to register the name Credit Registry Limited, which the plaintiff/respondent had presented for incorporation.

Briefly, the Facts

The plaintiff/respondent together with two other persons came to incorporate a company with the name Credit Registry Limited. The appellant Corporate Affairs Commission declined to register the name on the ground, that it will mislead the public into thinking that it is a public institution, such as Marriage Registry, Companies Registry, Deeds Registry, etc. This was purportedly communicated to the respondent in a letter dated 25th February, 2002, since respondent said they did not get the letter. The appellant was prepared to register and incorporate the objects of the memorandum of association of the company if the name chosen was changed to another acceptable name such as Credit Data Limited which the respondent had even suggested as an alternative name. The respondent insisted on using the rejected name, Credit Registry Limited and issued a notice to the Registrar General of the Corporate Affairs Commission purportedly under section 36(2) of the Companies and Allied Matters Act, 1990, requiring the Registrar General of the Corporate Affairs Commission to apply to the court within 21 days for directions in respect of the refusal to register the name. The refusal of the appellant to apply to court for directions as requested prompted the application for mandamus by the respondent which the lower court granted and which is the subject matter of this appeal.

The refusal of the appellant to apply to court for directions was based on the argument that section 36(2) of the Companies and Allied Matters Act is only applicable to registration of objects of a company in the memorandum of association and not to acceptance or rejection of names of companies for registration which is governed by section 30 of the said Companies and Allied Matters Act, 1990.

The appellant had in their notice and two grounds of appeal shown the foundation upon which this appeal is hinged. On the basis of those two grounds the appellant formulated two questions for determination which are:

1. Whether the provisions of section 36(2) of the Companies and Allied Matters Act, 1990, impose an obligation on the Corporate Affairs Commission (appellant) to apply to court for directions in respect of the appellant’s refusal to register the name Credit Registry Limited.
2. Whether the order of mandamus issued by the lower Court against the appellant requiring the appellant to apply to court for directions under section 36(2) of the Companies and Allied Matters Act was justifiable in law.

The respondent raised two issues for determination which are:

1. Whether or not, the learned trial Judge was right to have held as he did that section 36(1) to (6) of CAMA 1990 was the peak point of registration of companies and by virtue of section 36(1)( a) included matters under consideration relating to names in section 30(1) of the CAMA 1990 so as to enable the respondent come under the operation of section 36(2) of CAMA 1990.
2. Whether or not, the order of mandamus granted by the learned trial Judge was only to the effect that the respondent complies with the provisions of section 36(2) of the CAMA 1990 and did not compel the appellant to register the name Credit Registry Limited

Issue 1:

Learned Counsel for the appellant in arguing this point said section 30(1), (2) of the Companies and Allied Matters Act dealt with the registration or not of the name of a company while section 36 of the CAMA makes provisions on the registration of the memorandum and articles of association of a company seeking incorporation as a legal entity. He referred to and quoted the provisions of section 30(1), (2) of CAMA and section 36(1)(a) to (e), (2) of the same CAMA.

Learned Counsel said no provision requiring the commission to apply to court for directions exists in section 30, which deals with names of companies to be registered such as Credit Registry Limited. That since no dispute existed between the parties in respect of the registration of the memorandum and Articles of Association of the company proposed for incorporation, it is submitted that the lower court was in error to have invoked section 36(2) against the appellant. Learned Counsel further stated, that although there is no previous decision of the Court of Appeal or Supreme Court on the correct interpretation of section 36(2) of the Companies and Allied Matters Act, 1990, on the question of whether or not, section 36(2) also applies where the commission rejects a name for registration, it is submitted that the correct interpretation is that the same section 36(2) of CAMA applies to registration of memorandum and articles of association only and not to acceptance or refusal of names for a company proposed to be incorporated. He said this is because it is the registration of the memorandum and articles of association of a company that gives it the status of a legal personality and not the acceptance or rejection of its names. He referred to S. 36(5) of CAMA. That all a promoter seeking to incorporate a company needs to do if the name is rejected by the commission is choose another name. That where such a promoter insists on invoking the court’s jurisdictional power to force the commission to accept a particular name, nothing stops such a promoter from applying to court for a declaration that the name chosen passes the tests prescribed in section 30 of CAMA but not to invoke section 36(2) which relates to registration of the memorandum and articles of associations of a company proposed for incorporation.

Learned Counsel for the respondent submitted that by virtue of section 27(1) of CAMA, every memorandum of association submitted for registration shall state by provisions of section 27(1)(a); the name of the company, and by the provision of section 27(1)(c) the nature of the business or businesses which company is authorized to carry on, amongst other provisions. He referred to section 27(1)(6). He said that therefore no memorandum of association submitted for registration will therefore be considered if as a first step it does not bear a name.

Learned Counsel contended that by virtue of section 30 of CAMA, certain names are either prohibited or restricted, and that in consideration of the registration of the memorandum of association, names submitted on memorandum of association would have to pass the standard for acceptance of names prescribed under the provisions of that section.

Learned Counsel for respondent stated further that the test for the acceptability of names is stated clearly and succinctly under section 30(1) (a) – (d) and no further discretion outside what is prescribed therein is conferred on the appellant, such as an omnibus provision. That the difficulty faced by the appellant is in justifying by facts, the decision to refuse the name under any of these provisions. That to justify a decision under section 30(1)(c) of CAMA, there must have been a conflict between the stated objects of the proposed company as embedded in its memorandum of association and the proposed name submitted.

Learned Counsel said that the power to exercise the discretion under section 30 of CAMA is contained in section 36(1) (a) – (e) and it is stated clearly in section 36(1)(a) that the commission shall register the memorandum and article unless in its opinion they do not comply with the provisions of the Act, part of which provision is the requirement to scale prohibited or restricted names in section 30(1)(c), which the appellant has cited as reason for refusal. That having declined to register the memorandum of association under section 36(1)(a) as a result of their not complying with the provisions of section 30(1)(c) of the Act, the respondent was now within its right to exercise the right conferred by section 36(2) of the CAMA 1990, giving notice to the appellant to apply within 21 days to a court of competent jurisdiction asking for its directions.