CAMA fraught with contradictions, inconsistencies — Gadzama

 

Life bencher, scholar, world acclaimed arbitrator and Principal Partner of J-K Gadzama LLP, Chief Joe-Kyari Gadzama, SAN, points out the myriad of contradictions and inconsistencies in the amended Company and Allied Matters Act (CAMA) and warns the federal government against adopting the alien law without taking cognizance of our local realities. 

THERE have been so many complaints about the amended CAMA law. What is your take on it?

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There are contradictions and inconsistencies in the Act, particularly when you look at sub-section 1 of section 839 in contradistinction to sub- sections 2 & 7 of the same section 839 of the Companies and Allied Matters Act, 2020 (CAMA 2020). Sub-section 1, gives the Corporate Affairs Commission (CAC or Commission) an unfettered discretion to suspend the trustees of an association and appoint an interim manager or managers to manage their affairs where it reasonably believes that there is or has been misconduct or mismanagement. It is necessary or desirable to protect its property, ensure proper application of the property, public interest; or the activities are run fraudulently.

The discretion given to the Commission in sub-section 1 is nebulous and subjective and therefore liable to abuse. We may have an objective and reasonable Registrar General (RG) of CAC now, but he will certainly vacate office at the end of his tenure. The concern raised by stakeholders is that this discretionary power enshrined in sub-section 1 is subject to the whims and caprices of whoever is the RG at the time.

Consequently, when the trustees have been suspended and their only remedy is recourse to the court, they may be vindicated but the damage has already been done or the assets or property of the association dissipated.

Sub-section 2, stipulates that the trustees shall be suspended by an order of court upon the petition of the Commission or one-fifth of the association presenting reasonable evidence as requested by the court. This avails the petitioned trustees the opportunity not only to come face to face with their accusers but also to defend themselves in line with one of the age long principles of natural justice and the twin pillars of justice in our jurisprudence, which is audi alteram partem (let the other party be heard).

One of the concerns expressed by stakeholders is that when it comes to the exercise of discretion in this part of the world, it is most times exercised outlandishly or capriciously instead of judiciously.

Sub-section 7, on the other hand, provides that the Commission may suspend or remove any trustee after it has made an enquiry into the affairs of the association and finds out that the trustee has been responsible or privy to misconduct or mismanage ment or by order of the court establish a scheme for its administration. The analysis of the above sub-sections is that sub-section 1 deals with suspension of trustees and appointment of interim managers, sub-section 2 deals only with suspension of the trustees, while sub-section 7 mentioned suspension but also introduced the word “removal” of the trustees. The import of the above sections and concern of the stakeholders is that the Commission interprets the word “order” as contained in sub-section 1 of section 839 as the order of the Commission and not that of the court. The implication is that the Commission can suspend the trustees without seeking any order of court before taking the action. Sub-section 2 deals with another ground for the suspension of the trustees in which the court can neither intervene nor do anything until and unless the Commission or one-fifth of the association and, of course, the trustees (after suspension or removal) decide to petition to court. This has made the concerns of the stakeholders germane and reasonable to a large extent, as the Commission wields too much power in the extant law.

But you do believe that the law is not completely out of place…

There is certainly need for regulation of Incorporated Trustees (IT) and I am also of the opinion that we all need to be regulated even in our private lives as the decisions we take not only affect us and our dependents but also the society at large. Regulation therefore is paramount, especially when it comes to public affairs. As global citizens, there is nothing wrong in embracing best practices. But the bane of our society is bad leadership, lack of corporate good governance and accountability and transparency in public affairs.

The provision of section 839 (1) of CAMA 2020 is inelegantly drafted. There is need to introduce into the law that before the Commission can suspend or remove trustees and appointment of interim manager/s, it must first obtain an order of court which must be on notice and not ex parte. This means that the concerned trustee/s must be served with the processes of court and be given reasonable time, if it is a civil matter, and adequate time and facility to prepare his defence, if crime is alleged.

Imagine a situation where the Commission exercises its discretion wrongly and the court subsequently, sets it aside, already damage has been done and same has occasioned injustice.

The way forward is that in the interim, the registrar general should ensure that there is proper investigation, the affected trustee is given reasonable and adequate time to defend him/herself, the internal mechanisms like the Administrative Proceedings Committee, whose decisions are subject to confirmation by the board and the Hon Ministers approval are all religiously followed through.

The leaders/trustees of the ITs must be transparent, accountable and carry the members along to eliminate complaints and bickering. There is need for judicial intervention, and any association that is aggrieved in any way should go to court and seek a judicial interpretation of the concerned sections of the Act.

They can also recourse to the National Assembly and lobby for an amendment of the Act.

What has actually changed between the previous law and the amended one?

Under CAMA 2004, there is no provision for the Commission to suo moto and without recourse to the court suspend a trustee/s, or appoint interim manager/s.

There is certainly no provision in the repealed Act requesting the bank to make a report to the Commission with respect to dormant accounts of ITs or that empowered the Commission to direct transfer of credits in dormant bank accounts to other accounts.

These are the two major provisions that were not part of the repealed Act.

Some people have called for the deletion of some parts of the controversial section. Do you agree with them?

The new CAMA is a welcome development in the ease of doing business in Nigeria. But the “offensive” section/s especially as regards Part F, dealing with ITs, should be tinkered with. I do not subscribe to the clamour for the deletion of the entire section 839 of CAMA, but will suggest an immediate amendment.

There are also claims in some quarters that part of the controversial section is inconsistent with some provisions of the Constitution. How true is this?

There is a violation of the rights against expropriation of property. Section 43 of the Constitution of Nigeria has guaranteed the right of citizens to acquire and own immovable property anywhere in Nigeria and frowns at compulsory acquisition of such property contrary to the provisions of the Constitution. There is also the violation of the right to peaceful assembly and association as enshrined in section 40 of the Constitution. Furthermore, there is a violation of the right of the citizen to have any matter or question relating to his or her civil rights and obligation determined by the court and not an agency of government.

Speaking specifically on the section that says government can take over charity organisations’ money that has been dormant for five years, Prof Chidi Odinkalu during a webinar you hosted recently argued that the amended law erred. Do you agree with him?

He asserted that as a result of the peculiar nature of the ITs, which depend on funds from donor agencies, they do not have any choice than to invest the money in the bank or stretch it for five years or more in order to have resources to run the organisation. This is because they may get fund for a year or two and will not be able to get any other funding for the next three, four or more years. They have office space rent and staff to pay, maintain office equipment, cars etc.

In the light of this, section 842 of CAMA 2020, which empowers the Commission to direct transfer of credits in dormant bank accounts to other organisations, etc, should be amended to incorporate their peculiar circumstances or even expunged from the Act.

Some are opposing the law because they felt it is a needless replication of UK Charity law in Nigeria which have different socio-economic and political settings, and that if we can do that with the law, we should be able to replicate other welfarist programmes of the UK here too. Do you share their view?

Section 14 (1) sub-section (2), paragraph (b), of the 1999 Constitution of Nigeria (as amended) provides that the primary purpose of government is the security and welfare of the people it governs. Apposite to this is the need to ensure that the welfare of the citizens takes precedence and is prioritised by any government in power.

Government should not be in a hurry to adopt foreign laws without taking cognizance of our local realities and environment. Nevertheless, as the government is working on improving the lives of the citizens, it should also make or adapt other laws geared towards achieving the same objective and not otherwise.

There were allegations by CAN that the bill was earlier rejected and that they didn’t know how it became law. Some others said they weren’t aware of public hearing on it. Which of these groups do you belong to?

The National Assembly stated that they held public hearing on the bill before passage in the parliament and the assent of the President. CAN on the other hand has said that they are not aware, and were not notified of any public hearing on this Part F, dealing with ITs. Other NGOs have also come out to state the same fact and it is yet to be denied by any member of the National Assembly or its review committee.

What advice do you have for the National Assembly and the Federal Government when amending laws in future to avoid the outcry that greeted the present one?

Laws are made for man and not the other way round. Therefore, whenever there is need to amend any law, the critical stakeholders, being the persons or entities that the law will directly, indirectly or even remotely affect, must be carried along. Their inputs should also be adequately considered and incorporated and not jettisoned for no good reason.

Culled from The Nation

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