Lasisi v. Registrar of Companies(1976) 7 S.C. 73

In The Supreme Court of Nigeria
On Friday, the 2nd day of July, 1976
Suit No: SC.301/1975

Before Their Lordships


ATANDA FATAYI-WILLIAMS
……. Justice of the Supreme Court
MOHAMMED BELLO
……. Justice of the Supreme Court
AYO GABRIEL IRIKEFE
……. Justice of the Supreme Court


Between

Sikiru Agboola Lasisi Appellants



And


Registrar Of Companies Respondents



M. BELLO, J.S.C. (Delivering the Leading judgment): The Registrar of Companies, who is the Respondent, had refused to register under the Companies Decree No. 51 of 1968 the Memorandum and Articles of Association of a proposed company, to wit British Leyland International (Nigeria) Limited (hereinafter referred to as the company), when the papers were delivered to him for registration. Upon the application of the Appellant, who is one of the two subscribers to the Memorandum, to the Federal Revenue Court, Belgore J. ordered the Respondent to show cause why an order of Mandamus should not issue commanding him to register the company. Return was duly made by the Respondent to justify his refusal.
     After having heard the arguments of counsel for the parties, Belgore J., in his judgment delivered on 11th September, 1973, refused to make an order for Mandamus and dismissed the Appellants application. The Appellant has now appealed against that judgment.



     The facts of the case are not in dispute.  The promoters of the company had applied to the Permanent Secretary, Ministry of Internal Affairs, for permission to establish business in this country in the name of the company and to employ expatriates.  In his affidavit of 31st May, 1974, the Appellant deposed that the objects for which the company would be established are as follows:

  That the business as at present contemplated envisages a non-trading liaison concern with special responsibility for negotiating contracts and promoting the business of distributors of vehicles manufactured by British Leyland Motors.

   That it is envisaged that at a later stage the company may undertake trading or other assembly/manufacturing activities. By his letter dated 3rd September, 1973, the Permanent Secretary conveyed to the company his approval of the application on these terms:-

     ESTABLISHMENT OF BUSINESS

   Further to your application of 20th June, 1973, I am directed to convey approval for you to establish a non-trading liaison office in Lagos with responsibility of overseeing West Africa interests in British Leyland International Limited and assisting distributors with negotiations for major Contracts.  To this end you have been granted an expatriate quota allocation of one (1). For General Manager, West Africa for a duration of two (2) years, in the first instance. Your Business Permit No. MIA/B.6022/18 is attached herewith

  In stating his reasons for refusing to issue an order of mandamus, the learned judge made copious use of the business permit referred to in the aforementioned letter by relying heavily on the conditions imposed thereon.

It is therefore pertinent to set out the contents of the business permit in its entirety:

IMMIGRATION REGULATION, 1963 BUSINESS PERMIT NO.  MIS/B6022/18          

NAME OF BUSINESS                British Leyland International (Nig.) Ltd.

NAMES OF PROPRIETORS/DIRECTORS/PARTNERS OR OWNERS:   G.C. D Vallancey and J.B. Reardon-British

NATURE OF BUSINESS PERMITTED:     Non-trading Liaison Office with responsibility of overseeing West African interests in British Leyland International Limited and Assisting distributors with negotiations for Major contracts.

PLACE WHERE BUSINESS IS PERMITTED TO ESTABLISH:       Lagos

ANY OTHER CONDITIONS ENDORSED ON THE OPERATION OF THE BUSINESS PERMIT EXPATRIATE QUOTA: One (1)

POSITION IN WHICH EXPATRIATE QUOTA IS PERMITTED:     Is General Manager for two (2) years                                           

            The affidavit of the Appellant further shows that he delivered to the Respondent for registration the Memorandum and Articles of Association of the company together with the declaration of compliance; that the Respondent refused to register the same but requested the company, in his letter of 16th April, 1974, to re-draft the Memorandum on the lines set out in the business permit and that the subscribers to the Memorandum should be those persons whose names appear in the business permit.

  The counter-affidavit of the Assistant Registrar set out the reasons for the Respondent refusal to register the company. The Assistant Registrar, inter alia, deposed as follow. That on reading through the objects of the said British Leyland International (Nigeria) Limited I noticed that they exceeded the power conferred on the proposed Company in the nature of business set out in the said Business Permit as they included manufacturing and trading activities.

     That the offending paragraphs in the memorandum include 3(a) to 3(e), 3(g) and 3(i) to 3(u).

9. That the British Leyland International (Nigeria) Limited were accordingly advised through their solicitors Messrs. Fred Egbe and Company, by letter Ref. No. 292/74/S of 16th April, 1974 to re-draft their Memorandum of Association on the lines set out in the said Business Permit and to make sure that at least the name of one of the two people mentioned in the Permit exhibit SAL 2, that is G.C. D Vallancey and J.B. Reardon must be one of the subscribers to the memorandum and articles of association or an authority from them is produced.

10.That the said letter of advice is exhibited to the applicants affidavit as exhibit SAL 4 and so far the company has not complied with the request.

11.That paragraph 3 of the Applicant affidavit cannot be correct on the face of the object clauses of the Memorandum of Association of British Leyland International (Nigeria) Limited.

13.That section 1, sub-section 1, of the Companies Decree No. 51 of 1968 requires the purpose of any persons associated to form an incorporated company with or without limited liability to be lawful.

14. That the purpose of persons associated to incorporate British Leyland International (Nigeria) Limited is as per the objects of the Memorandum of Association of the company.

18.That the Applicants reasons for including clauses covering trading activities in its Memorandum of Association in violation of the Business Permit is as contained in paragraph 4 of the Applicant’s Affidavit.

19. That I was told by the Registrar and I verily believe him that his refusal to register the Memorandum of Association of British Leyland International (Nigeria) Limited as it stands is in good faith and only temporary pending Applicant’s compliance with the Registrars advice as contained in the aforementioned Exhibits SAL 4.

   We do not consider it necessary to set out the objects which the Respondent has objected to their being included in the Memorandum. It is sufficient to state that they are much wider than the object imposed on the business permit. While the object in the business permit has been restricted to business or non-trading liaison in overseeing the interests of the British Leyland International Limited, which appears to be a foreign company, and in assisting its distributors with negotiations for major contractors, the memorandum goes further than that by including objects which empower manufacturing and trading activities.

   We may as well summarise the case for the parties in the court below. The Appellants case was that the promoters had done every thing required for the formation of the company whose objects were lawful; that they had complied with the requirements of the Companies Decree; that the reasons relied upon by the Respondent for his refusal to register were invalid and the Court should compel him to register the company.

            The Respondents case was as follows:

(1) that G.C. Vallancy or J.B. Reardon who have been stated in the business permit as being

(2) that the objects in the Memorandum empowering the company to go into manufacturing and trading business were:

     (a) ultra vires the business permit; and

     (b) offensive to the provisions of the Nigerian Enterprises Promotion Decree, 1972;

(3)that having regard to the foregoing reasons some of the purposes for which the company was being formed were unlawful and the Respondent was therefore not obliged to register the company.

       In his judgment, the learned judge, after having considered several authorities as to who should subscribe to the Memorandum in favour of the Appellant, held that the Respondent had exceeded his authority by demanding that a particular individual should sign the Memorandum.  No complaint has been made before us against this finding.

     The learned judge then proceeded to consider the objections relating to the conditions imposed on the business permit against the wider objects included in the Memorandum and made the following observations before reaching his conclusion:-

  The next point for consideration is whether the proposed British Leyland International (Nigeria) Limited is a Nigerian or an alien Association?  From Exhibit SAL 2 the Business permits the proprietors or the Directors or the Partners or the owners of the Company are Messrs. G.C. D Vallancy and J.B. Reardon and both were said to be British.  It is a pity that Exhibit SAL. 2 did not specify which of the four relationship was the two British gentlemen to the company but whichever relationship be it that of proprietors, or that of partners or the owners each of the relationship shows that they have financial interest in or they are part owner of the Company and that renders the Company not to be a Nigerian Association.  If they are non-share owning directors, they must be standing in for the British Company of the same name in which case that foreign company has some interest.  If therefore anything the Company intends to carry out in its Memorandum is one reserved for the Nigerian Association in both schedules I and II (since the capital of the proposed company is N2,000) of Sections 4 and 5 that object will be unlawful.

      Many of the objects of the proposed Company, in its paragraph 3 are within Schedules I and II, for instance paragraphs 2(n) and 3(o) are enterprises specified in item 10 of Schedule II and paragraph 3(q) embraces item 17 of Schedule I and item 25 of schedule II.  In the face of this clear unlawfulness of the object the Registrar is justified in refusing registration.

He concluded his judgment by stating:

The Principle in which the discretion of the Registrar in refusing to register a Company can be successful challenged in Court is laid by Avory J., in the case of the King vs. the Registrar of Companies 1912 3 K. B. 23 where at page 34 he said:-

  in order to displace the decision of the Registrar and justify this Court in interfering by Mandamus, it would be necessary for the applications to show one or more of the three things:

either that the Registrar had not in fact exercised any discretion in the particular case, or that he had exercised it upon some wrong principle of law, or

  that he had been influenced by extraneous considerations which he ought not to have taken into account

In this case the Applicant has not shown any of these grounds, besides the fact that various objects of the Company were unlawful, I therefore refuse to make the order absolute and the motion is dismissed.

       The only ground of appeal argued at the hearing of the appeal is:

The learned trial judge erred in law in holding that a company is not entitled to be incorporated with powers which although not illegal do not comply with the Nigerian Enterprises Promotion Decree, 1972

      We would wish to make some observations on the ground of appeal as it stands.  It appears to be self-contradictory.  We are of the view that if a company has powers which do not comply with the provisions of the Nigerian Enterprises Promotion Decree, those powers must be unlawful or illegal to the extent of their non-compliance with the Decree. This has been the finding of the learned trial judge. We therefore think the ground was intended to mean as Mr. Odofin, counsel for the Appellant, has argued it thus:  that the company is a Nigerian company; that its subscribers are Nigerians; that for the moment there is no evidence of any alien, whether corporate or incorporate holding any if its shares and that for these reasons the issue of non-compliance with either the Immigration Act or the Nigerian Enterprises Promotion Decree does not arise.  Under the circumstances, he argued, the Respondent was bound to register the company.

      Mr. Oladapo, counsel for the Respondent has conceded that Nigerians need not apply for permission of the immigration authority to incorporate a company but that where aliens may be involved, permission of the immigration authority is a condition precedent to registration. He further contended that the business permit shows that two aliens, namely G.C. D Vallancy and J.B. Reardon, both British, have been involved in the formation of the company; that as the objects of the company are wider than the objects in the business permit, the objects of the company are contrary to the conditions imposed under the Immigration Act. He further argued that as the capital of the company is N2,000, the company falls under the provisions of Sections 4 and 5 of the Nigerian Enterprises Promotion Decree 1972, and its enterprises are there under exclusively reserved for Nigerian citizens or associations.  He concluded his contention that being associated with aliens rendered some of the objects i.e. the ones objected to by the Respondent as unlawful, and the Respondent therefore acted rightly in his refusal to register the company.

      We shall now deal with the issue as to whether the company is a Nigerian or an alien association within the meaning of the Nigerian Enterprises Promotion Decree, 1972.  Relying exclusively on the business permit which specifies as we have earlier indicated, G.C. D Vallancy and J.B. Reardon (both British), as being the Proprietors/Directors/Partners or Owners of the company, the learned judge concluded that the company is not a Nigerian association, in other words, he held it to be an alien association and as such is caught by the prohibitions in Schedules I and II or the Decree from carrying on the enterprises specified there in.

Now Section 16(1) of the Decree defines inter alia: alien means a person or association whether corporate or incorporate, other than a Nigerian citizen or association; Nigerian Citizen or association means (a) a person who is a citizen of Nigeria by virtue of the Constitution of the Federation and the Nigerian Citizenship Act, 1960; (b) (not relevant to the purposes of this appeal); any company registered under the Companies Decree 1968 partnership, association or body (whether corporate or incorporate), and except as otherwise prescribed by or under this Decree, the entire capital or other financial interest of which is owned wholly or exclusively by citizens of Nigeria.

Ownership in relation to any enterprise includes any proprietary interest in the enterprise beneficially, and any derivative of that word shall be construed accordingly.

    It is clear from the definition under Section 16(1)(c) of the Decree that the correct test for determining whether a company is a  Nigerian association or not is to discover the owners of its capital ad other financial interest.  If its capital and other financial interest are wholly and exclusively owned by Nigerian citizens, then it is a Nigerian association.  If, however, a portion of its capital or other financial interest is owned by an alien then, except as otherwise prescribed by or under the Decree, it is an alien association.

   We have earlier on observed that the learned trial judge based his finding that the company is an alien association from the disclosure in the business permit that the two aliens mentioned therein are the proprietors or directors or partners or owners of the company.  He reasoned that, although the exact relationship between the two British gentlemen and the company was not indicated, it may be presumed that whether the relationship is that of proprietors or partners or owners they must have some financial interests in or they are part owners of the company.  He further presumed that if they are non-share owning directors, then they must be standing in for the British company, British Leyland International Limited, which must also have some interest in the company.

        With all due respect to the learned judge, the foregoing presumptions are not based on the materials before him but are founded on mere conjuncture.  The Memorandum shows that the company has a share capital of N2,000 divided into 1,000 ordinary shares of N2 each and that the two subscribers to the Memorandum, namely the Appellant and one Michael Ihenakaram, took one share each.  It is conceded that the two subscribers are Nigerian citizens.  It follows therefore that there remains 998 shares of the company for allotment. There is no evidence that any of these remaining shares has been allotted to either of the two British gentlemen or to the British company.

       It has been suggested during the argument at the hearing of this appeal that the whole arrangement is a device to defeat the object of the Nigerian Enterprises Promotion Decree and that the two subscribers are being used as front men to achieve that purpose. We think there is some evidence in the records of appeal to speculate on this suggestion. It appears that the alien company, the British Leyland International Limited, has the intention of carrying on business in Nigeria and for that reason it must incorporate a separate entity in accordance with the provision of Section 370 of the Companies Decree. Under the circumstances, it is possible to speculate that there must have been some arrangement between the subscribers to the Memorandum of the proposed company and the alien company or its agents with regard to the shares or other financial interest in the proposed company.  However, these arrangements have not been disclosed in the affidavit and are therefore not before the court.  Consequently, the question whether an alien has an interest or own shares in the proposed company can only be answered after its remaining or part of the 998 shares have been allotted and the shareholders have been published. It appears to us that the objection of the Respondent to the registration of the company on the ground that some of its objects have offended the provisions of the Nigerian Enterprises Promotion Decree is premature.

       For the reasons we have stated, we are of the view that the learned judge erred in law in holding that the company is not a Nigerian association within the meaning of the Nigerian Enterprises Promotion Decree.  The evidence before him does not show that any alien, corporate or incorporate, owns any of its shares or other financial or proprietary interest. The evidence, however, shows that two Nigerian citizens own its two shares.  The question as to who will own the remaining shares is a matter of speculation and is therefore a question that a court of law should not indulge in.  We are of the view that the learned trial judge ought to have held from the evidence before him that the company is a Nigerian association, and we so hold accordingly.

       We may briefly dispose of the issue relating to the business permit. The learned counsel for the Respondent has conceded that the Respondent would not have objected if the company had been a Nigerian association as such association does not require a business permit under the Immigration Act. We agree with the learned counsel that the provisions relating to business permit under Section 8 of the Immigration Act 1963, and regulation 3 of the Immigration Regulations 1963 do not apply to Nigerian citizen who intend to incorporate a Nigerian association as defined by Section 16 (1)(c) of the Nigerian Enterprises Promotion Decree, 1972.  The conditions imposed on the business permit only apply to the two British gentlemen, who are aliens. Having held that the company is  a Nigerian association whose subscribers are Nigerian citizens, we are of the view that the learned judge erred in law in holding that the objects contained in its Memorandum are ultra vires the business permit granted under the Immigration Act and the Regulations made there under.

      It now remains to consider the view of the learned judge that the duty of the Respondent to register a company is a discretionary duty; that his exercise of that discretion in refusing to register can only be challenged if he failed to comply with the principle laid down in the King v. The Registrar of Companies (Supra) and that the Appellant had failed to show non-compliance with that principle.

           The principle stated in the case of the King v. Registrar of Companies was concerned with the construction of Section 8 sub-section 1, of the Companies (Consolidation) Act, 1980, which provides:

  S.8(1)   A company may not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the registrar requires

            The provisions of sub-section (1)(a) of section 19 of our Company Decree, 1966, which is similar to the aforementioned sub-section of the repealed English Act, are not identical. The relevant part of Section 19(1) reads:

19 – (1): No company shall be registered under this Decree by a name which 

(a)is identical with that by which a company in existence is already registered, or so neatly resembles that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the registrar requires

     The learned trial judge fell into two errors by applying the principle stated in the King v. Registrar of Companies Case (Supra).  Firstly, that principle was concerned with the exercise of the Registrars discretion under the repealed English Act to register a company by a name which was identical with that of an existing company and under what circumstances the court may interfere by mandamus with the Registrars exercise of that discretion. The provisions of our section 19(1)(a), however, are not discretionary but are prohibitive and mandatory. Secondly, as the refusal of the Respondent to register the company in the case in hand was not founded on identical name with that of an existing company, any reference to a case decided on section B(1) of the repealed English Act or our section 19(1) is irrelevant.  It seems to us therefore that the learned judge reached his decision on wrong principles of law.

     We now proceed to consider whether the trial judge was in error or not in refusing to make an order for mandamus in view of the suspicious relationship between the subscribers to the Memorandum of the company and the two British gentlemen and the British Leyland International Limited.

   As a general rule the making of the order of mandamus is a matter of the discretion of the court.  In Commissioner for Local Government Lands and Settlement v. Kadarbhai (1931) A.C. 652 at 660, Lord Atkin aptly stated the general rule thus:

The writ of Mandamus, which is a high prerogative writ, is of the greatest value in maintaining the law, but it is discretionary. It has, however, been held in the King v. Bishop of Sarum (1916) 1 K.B. 466 that where the right the application seeks to enforce is the performance of public duties, which cannot be secured at all if a mandamus is refused, and the duties are only ministerial, the issue of the writ is not discretionary.

    In the case in hand, the Appellant in association with his co-subscriber has a right to form a private company, and the Articles of Association of the company the subject matter of this case show it to be a private company, by virtue of the provisions of Section 8(1) of the Companies Decree which reads:-

1- (1) Any seven or more persons, or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise dumpling with the requirements of this Decree in respect of registration, form an incorporated company with or without limited liability

       Provided the objects of the proposed company are lawful and the promoters have complied with the requirements of the Companies Decree, we are of the view that the Registrar of Companies has a duty, which is a ministerial one to register the company in accordance with the directive of Section 14 of the Decree which reads:

14.The memorandum and the articles, if any, shall be delivered to the Registrar and he shall retain and register them

      We have earlier on held that the objects of the company, which the Respondent thought were offensive to the business permit granted under the Immigration Act and to the provisions of the Nigerian Enterprises Promotion Decree and thereby refused to register, do not in any way offend the Act or the Decree. It seems to us that these objects are lawful. We have also earlier pointed out that the promoters had complied with the requirements of the Companies Decree and had delivered the declaration of compliance together with the Memorandum and Articles of Association to the Respondent.

      Furthermore, except by mandamus, the Appellant has no other remedy to enforce the right to form the company accorded to him by Section 1(1) of the Companies Decree.

  For the foregoing reasons, we think that the learned judge erred in refusing to issue an order of mandamus.  He ought to have granted it under the circumstances of the case. We therefore allow the appeal and the order dismissing the Appellants application, including the order as to costs, are hereby set aside. Instead, we order that an order of mandamus shall issue commanding the Respondent to register the Memorandum and Articles of Association of British Leyland International (Nigeria) Limited under the Companies Decree, 1968. This shall be the judgment of the court.

  The Appellants are entitled to the costs in this Court assessed at N112 and in the court below assessed at N20.




Appearances

A. Odofin Esq.
For the Appelants

B. A. A. Oladapo Esq.
For the Respondents