Appeal court affirms nullification of CAMA provisions on CAC powers over religious, others

The Court of Appeal in Abuja has upheld a Federal High Court judgement that nullified several provisions of the Companies and Allied Matters Act (CAMA), 2020, which gave the Corporate Affairs Commission (CAC) powers over incorporated trustees, including religious and other associations.

Join the Premium Times WhatsApp Community For Quick Access To News and Happenings Around You.

Open in WhatsApp

A three-member panel, in a unanimous judgement, held that sections 839, 842, 843, 844, 845, 846, 847 and 848 of CAMA infringed upon constitutionally protected rights to freedom of thought, conscience, religion, association, and peaceful assembly.

The court also affirmed that Emmanuel Ekpenyong, a constitutional lawyer with Fred Young & Evans LP, had the legal standing to challenge the provisions after he argued that they infringed on his fundamental rights.

The three-member bench delivered the judgement on 17 September. But PREMIUM TIMES obtained a copy of the judgement on Friday.

The dispute

The controversy over the amended CAMA began almost immediately after the late President Muhammadu Buhari signed it into law in August 2020.

Although the Act introduced several reforms to Nigeria’s corporate environment, its provisions on incorporated trustees, which cover churches, mosques, charities, NGOs and other associations, drew strong objections from religious organisations and civil society groups.

At the centre of the controversy was Section 839, which gave the CAC powers to suspend trustees and appoint interim managers where certain conditions existed, including alleged misconduct or mismanagement, fraud or where intervention was considered necessary in the public interest.

Stay Ahead with Premium Times

Add as a preferred source on Google

Religious organisations feared the provision could give the government excessive control over their internal affairs.

The Christian Association of Nigeria (CAN) called for the law to be amended, while the CAC maintained that it would not arbitrarily suspend trustees and that its actions remained subject to judicial review.

Amid the ensuing controversies, Mr Ekpenyong instituted the suit on 31 August 2020 at the Federal High Court in Abuja.

He sued the National Assembly, the CAC and the Attorney General of the Federation (AGF), over provisions of CAMA which he argued violated his constitutional rights.

In his suit, Mr Ekpenyong challenged the sections in dispute, urging the court to rule that the disputed provisions infringed upon his freedom of thought, conscience and religion, freedom of association and peaceful assembly, as well as his right of access to court.

He relied on Sections 38 and 40, among other provisions, of the Nigerian constitution.

What the Federal High Court ruled

Judge James Omotosho agreed with Mr Ekpenyong in his judgement delivered in April 2023, ruling that the powers granted to the CAC to regulate and administer incorporated trustees under sections 839 to 848 were excessive and infringed on his constitutional rights.

The judge also held that Mr Ekpenyong had the legal standing to challenge the provisions and declared the affected sections unconstitutional, null and void.

Judge Omotosho further held that Section 851, which empowered the Administrative Proceedings Committee to determine matters arising under CAMA, was inconsistent with Section 251(1)(e) of the Constitution, which confers relevant jurisdiction on the Federal High Court.

The CAC was dissatisfied with the decision and appealed to the Court of Appeal through its lawyer, Jibrin Okutepa, a Senior Advocate of Nigeria (SAN).

CAC’s appeal

On appeal, the CAC argued that the Federal High Court erred in assuming jurisdiction over Mr Ekpenyong’s fundamental rights suit. The agency argued that Mr Ekpenyong lacked the legal standing to institute the suit.

But Mr Ekpenyong opposed the appeal and maintained that the rights to freedom of thought, conscience and religion and freedom of association and peaceful assembly were fundamental to a democratic society.

He argued that the Nigerian constitution protected his right to practise his faith and associate with other members of his religious community.

He also argued that the powers given to the CAC under the disputed provisions could allow the commission to interfere with the leadership and affairs of religious associations by suspending trustees, appointing interim managers and managing their accounts.

Court of Appeal’s decision

The Court of Appeal substantially agreed with the Federal High Court.

Judge Okorowo, who read the Court of Appeal’s judgement, held that voluntary associations are generally supreme in managing their internal affairs and that courts should not interfere unless an association acts contrary to its own constitution.

The appellate court held that the trial court was right to invalidate the provisions that interfered with the constitutional freedoms protected under Sections 38 and 40 of the Constitution.

The court also rejected the argument that the restrictions imposed by the provisions could be justified under Section 45(1) of the Constitution.

Judge Okorowo held that the disputed provisions infringed the rights guaranteed by Sections 38 and 40 and were not reasonably justifiable within the meaning of Section 45(1).

The court consequently affirmed the Federal High Court’s decision striking down Sections 839, 842, 843, 844, 845, 846, 847 and 848 of CAMA.

The Court of Appeal, however, did not uphold the Federal High Court’s wholesale nullification of Section 851.

The appellate court held that the section was unconstitutional only to the extent that it purported to give the Administrative Proceedings Committee power to determine, at first instance and to the exclusion of the Federal High Court, justiciable disputes arising under CAMA and impose penalties in the manner of a court.

“The remaining administrative and regulatory functions of the committee subsist, subject to the supervisory jurisdiction of the Federal High Court,” the court held.

The court therefore modified the Federal High Court’s decision on Section 851 while affirming the nullification of Sections 839 and 842 to 848.

On Mr Ekpenyong’s standing, the Court of Appeal affirmed the finding of the lower court, holding that he had the legal standing to institute the action on the narrow basis of his personal interest and membership of a registered religious association.

“The finding that the 1st respondent possessed locus standi to institute the action is affirmed, on the narrow basis of his personal interest and membership of a registered religious association,” the court held.

The court consequently dismissed the CAC’s appeal in substantial part.

Judge Abba Mohammed and Judge Eberechi Nyesom Wike concurred with the judgment.

What the ruling means

The judgement has now placed limits on the extent to which the CAC can exercise regulatory powers over incorporated trustees where those powers conflict with constitutionally protected freedoms.

The Court of Appeal’s decision therefore preserves the regulatory role of the CAC but draws a boundary around powers that could interfere with freedom of religion and association.

However, the aggrieved party can still appeal the Court of Appeal’s decision at the Supreme Court, whose decision is final on legal disputes in the country.