Board Chairmanship: Do the Articles of Association Trump CAMA?

CASE TITLE: GEOFF OHEN LTD & ANOR v. EKOCORP PLC & ANOR LPELR-81902(CA)
JUDGMENT DATE: 13TH JUNE, 2025
JUSTICES: MOHAMMED MUSTAPHA, J.C.A.
PAUL AHMED BASSI, J.C.A.
NGOZIKA UWAZURUNONYE OKAISABOR, J.C.A.
DIVISION: LAGOS

PRACTICE AREA: COMPANY LAW

FACTS:

This appeal borders on Company Law.

The appeal is against the judgment of the Federal High Court Lagos (trial Court) delivered on the 15th day of January, 2024. 

The facts of the suit before the trial Court is that upon the incorporation of the 1st Respondent company, the Articles of Association was registered and Article 80 of the said Articles of Association identified the founding Directors of the 1st Respondent (Dr. Alexander Chukwuma Eneli, Dr. Augustine Amaechi Obiora and the 2nd Respondent) as its First Directors while Article 82 therein provides that the Chairman of the Board of Directors of the 1st Respondent shall be appointed from among the said First Directors. True to the Articles of Association, the First Directors were appointed as Chairman of the 1st Respondent in succession. But at a meeting held on the 4th day of May, 2021, Dr. Augustine Amaechi Obiora concluded his tenure as Chairman and nominated Professor Joe Irukwu SAN., as Acting Chairman of the Board of Directors who in turn superintended an Annual General Meeting wherein a resolution was passed to approve 110,000,000 units of shares in favour of the Appellants, sale of which alleged to be fraught with fraud, hence, the 2nd Respondent (together with children and persons representing the estate of Dr. Alexander Chukwuma Eneli) sued to nullify the resolutions, same having been superintended by Professor Irukwu SAN, while the Appellants on the other hand bolted to the trial Court to challenge the long-observed Articles of Association, aiming to strike relevant portions down. The Appellants, as Plaintiffs, initiated the suit before the trial Court vide an Originating Summons, to which the 2nd Respondent filed a Counter-Affidavit. The trial Court disagreed with the Appellants’ arguments that Article 82 of the Articles of Association is inconsistent with the provisions of Section 289(4) of the Companies and Allied Matters Act 2020, refused six (6) out of the seven (7) reliefs sought by the Appellants, held that the juxtaposed provisions are at best complementary and ordered the 1st Respondent’s Board of Directors to convene a meeting within 60 days from the date of the Judgment for the purpose of ratifying the 2nd Respondent as Chairman of the Board of Directors of the 1st Respondent.

Dissatisfied with the judgment, the appellant has appealed.

ISSUES FOR DETERMINATION:

The Appellants formulated five (5) issues for determination, to wit:

1. Whether on proper construction of Ss. 46(1) and 723(1) of Companies and Allied Matters Act 2020 (“CAMA”), the Learned Trial Judge was right to hold that the Articles of Association of a Company is the company’s governing document and not CAMA.

2. Whether from the facts and circumstances of this case, the Learned Trial Judge was right in law to refuse to recognize, respect, uphold and abide by the choice of the members of the Board of Directors of the 1st Respondent in electing one of their members to wit: Prof. Joe Irukwu SAN as the Chairman of the Board of Directors in exercise of their statutory right under S. 289(4) of CAMA 2020.

3. Whether on proper construction of S. 289(4) of CAMA 2020, the Learned Trial Judge was right to hold that in determining how the Chairman of the Board of Directors of a limited liability company like the 1st Respondent shall emerge, the provisions of the Company’s Articles of Association like Article 82 of the Articles of Association of the 1st Respondent is superior to and takes precedence over the provisions of S. 289(4) of CAMA.

4. Whether from the facts and circumstances of this case, the Learned Trial Judge was right in law to make orders in favour of the 2nd Respondent for the convening of a meeting of the Board of Directors of the 1st Respondent for the purpose of ratifying the 2nd Respondent as its Chairman and to fix the duration of his chairmanship.

5. Whether the Learned Trial Judge despite having found and held that the 2nd Respondent was neither appointed nor ratified by the Board of Directors of the 1st Respondent as its De jure Chairman of the Board was right not to have granted the Appellants the relief in their originating summons of an injunction restraining the 2nd Respondent from parading himself or holding himself out as the De jure Chairman of the Board of the 1st Respondent.

The 2nd Respondent adopted the five (5) issues for determination distilled by the Appellants with slight modifications, which the Court in turn, adopted in the determination of the appeal.

COUNSEL SUBMISSIONS:

On issue one, Learned Senior Counsel answered in the negative and submitted that by virtue of the provisions of Sections 46(1) and 723(1) of Companies and Allied Matters Act (CAMA), 2020, it (CAMA) is the grundnorm with respect to laws, rules and regulations regulating a limited liability company and as such any provision contained in the Articles of Association of a Company is to the extent of its inconsistency with the provisions of CAMA, is null and void. That where there is a conflict between the provisions of CAMA and Articles of Association of the 1st Respondent, it is CAMA that shall prevail, take precedence and/or override the provisions of Articles of Association.

Counsel also submitted that, while Section 289(4) of CAMA statutorily gives the members of the Board of Directors of the 1st Respondent the right to elect any of their members to be the Chairman of the Board of Directors; Articles 82 of the Articles of Association of the 1st Respondent designated certain persons known as first Directors including the 2nd Respondent to be the only persons qualified to be the Chairman of the Board of Directors.

That by virtue of Section 46(1) of CAMA, any interpretation of Article 82 of the Articles of Association of the 1st Respondent that directly abrogates or takes away the statutory right given to the members of the Board of Directors of the 1st Appellant under Section 289(4) of CAMA to elect a Chairman of the Board from among themselves automatically renders Article 82 invalid, null and void. Counsel cited and placed reliance on Abubakar vs INEC (2020) 12 NWLR (PT 1737) 37 AT 153 and Oyeyemi vs Commissioner for Local Government, Kwara State (1992) 2 NWLR (Pt. 226) 661 at 684.

The Learned Senior Counsel contended on the second and third issues raised, that by virtue of Section 289(4) of CAMA, it is the statutory right of the members of the Board of Directors of the 1st Respondent to elect any one of their members as the Chairman of the Board of Directors.

That it is the law that, the Courts must never embark on judicial dictatorship or judicial oppression relying on the case of Gemade vs A.P.C. (2023) LPELR-59573 (CA).

Counsel further submitted that when a statute as in this case has provided for the procedure to be followed in electing the Chairman of the Board of Directors, the Court has no choice but to uphold the said procedure; that any other method for electing or appointing a Chairman of the 1st Respondent particularly as stipulated under Article 82 of the Articles of Association will be null and void. He cited and relied on Federal Government of Nigeria vs. Zebra Energy Ltd (2002) 18 NWLR (Pt. 798) 162 and N.P.F. vs. Police Service Commission (2024) 2 NWLR (Pt. 1922) 231.

On his part, Learned Counsel for the 2nd Respondent argued issues one, two and three together. On issue one, he submitted that the Articles of Association are the governing document for companies and set out the rules on how a company is to be administratively managed. That as such, the Articles of Association will cover areas such as administrative governance and structure, together with how the company should be conducted more generally and the rules surrounding this.

Counsel referred to Section 32 of the Companies and Allied Matters Act 2020 and the case of Salomon v. Salomon & Co. (1897) AC 22 and submitted that a company acquires legal personality upon incorporation and registration of its Memorandum and Articles of Association. That a company therefore becomes a legal entity and carries out its affairs only as set out in the company’s Memorandum and Articles of Association.

Counsel also pointed out that Sections 32 and 34 of the Companies and Allied Matters Act clearly demonstrate and lay bare the indispensability of and central position occupied by Memorandum and Articles of Association in a company’s (internal) administration, management and operational structure. That the Articles of Association is a fundamental governing document in regulating the internal affairs, proceedings, management and administration of a company like the 1st Respondent.

That by Section 46(1) of the Companies and Allied Matters Act and the case of Ladejobi v. Odutola Holdings Ltd. [2002] 3 NWLR (Part 753) 121, the 1st Respondent (and every other company) is bound by the Articles of Association, as a deed, to the extent to which the 1st Respondent and its members and officers have agreed to observe and perform the provisions of the Articles of Association. He cited and relied on Obikoya v Ezenwa (1973) 8 NSCC 504; Nat. Palm Produce Association (Nig) Ltd. v. Udom (2014) NWLR 437-638 (Part 1410) 479 at 501 paras. A-C, F-G.

On issue 2, Learned Counsel submitted that, the Appellants did not approach the lower Court to interrogate the alleged inconsistency between Article 82 of the Articles of Association and Section 289(4) of the Companies and Matters Act prior to the election of Professor Joe Irukwu as Acting Chairman of the 1st Respondent. Counsel urged the Court to hold that the lower Court rightly held that, the 1st Respondent’s Articles of Association is its governing document and Professor Joe Irukwu is not one of the First Directors identified in Article 80 of the 1st Respondent’s Articles of Association and the purported election of the said Professor Joe Irukwu was in gross violation of the 1st Respondent’s extant Articles of Association. The cases of Adeosun & Ors v. Ayeni & Ors (2013) LPELR-21135(CA) and Oye v. Odidan & Ors (2024) LPELR-62616(CA) were cited.

On issue 3, learned Counsel submitted that Section 289(4) of the Companies and Allied Matters Act does not supplant itself for the provisions of Article 82 of the 1st Respondent’s Articles of Association, as the said Section 289(4) relates to chairmanship of meetings of the Board of Directors. That Article 82 is not inconsistent with the provisions of Section 289(4) of the Companies and Allied Matters Act, by any stretch of statutory interpretation and there is therefore no provision in the 1^st Respondent’s Articles of Association which contradicts the Companies and Allied Matters Act, as to subject one to the other or activate the provisions of Sections 46(1) and 723(1) of the Companies and Allied Matters Act 2020.

DECISION/HELD:

The appeal succeeded. The judgment of the trial Court was set aside..

RATIO:

COMPANY LAW- MEMORANDUM AND ARTICLES OF ASSOCIATION OF A COMPANY : Whether the provisions of the Articles of Association of a company on the election of a chairman of the Board of Directors can override the provisions of the Companies and Allied Matters Act –

“In resolving Issue 1, an appropriate start point would be a reference to the various provisions of CAMA 2020 which form the crux of the dispute between the parties. CAMA 2020 provides in Section 289(4) thus: “The directors may elect a chairman of their meetings and determine the period for which he is to hold office, but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding same, the directors present may choose one of them to be chairman of the meeting.” While in 46(1), it provides: “Subject to the provisions of this Act, the memorandum and articles, when registered, shall have the effect of a deed between the company and its members and officers and between the members and officers themselves whereby they agree to observe and perform the provisions of the memorandum and articles, as altered in so far as they relate to the company, its members, or officers.” Finally in Section 723(1), its provides; ” Except as otherwise expressly provided in this Act- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the Memorandum or Articles of a company, or in any agreement executed, by it, or in any resolution passed by the company in general meeting or by its Board of Directors whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the Memorandum or Articles, agreement or resolution as in paragraph (a) shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be. (2) Any provision of this Act overriding or interpreting a company’s Articles shall, except as provided by this Act, apply in relation to articles in force at the commencement of this Act, as well as to articles coming into force thereafter, and shall apply also in relation to a company’s memorandum as it applies in relation to its articles. As his lordship Per KEKERE-EKUN, JSC(now CJN) put it in SANI V. PRESIDENT, FEDERAL REPUBLIC OF NIGERIA (2020) LPELR – 50990 (SC), “The principles guiding the interpretation of statutes have been re-stated on numerous occasions by this Court. The general principle is that where the words used are plain and unambiguous, they must, as far as possible, be given their natural and ordinary meaning, unless to do so would lead to absurdity. It has been held that the plain words used by the Legislature is the best guide to their intention.” Again, I take the liberty of referring to AMAECHI v. I.N.E.C (2008) 5 NWLR (Pt. 1080) 227 S.C. where the Apex Court held: “It is settled law that in the construction of a statute, the primary concern of the Judge is the attainment or ascertainment of the intention of the legislature by examination of the language used therein. Where the language used in the legislation or statute or Constitution is clear, explicit and unambiguous, as found in the instant case, the Judge must give effect to it as the words used speak the intention of the legislature.” In particular interest here is Section 723(1) of CAMA 2020 which provides unequivocally that: ” Except as otherwise expressly provided in this Act- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the Memorandum or Articles of a company……..” The wordings of the statute include the words “Shall” and “Notwithstanding”. When used in a statute, it usually takes away any discretion in the interpretation and connotes mandatory compliance. This has been re-echoed time and again by the Courts. See Per DANIEL-KALIO, J.C.A’s dictum in THE SPEAKER KADUNA STATE HOUSE OF ASSSEMBLY & ORS v. RT. HON BITYONG YAKUBU NKOM & ANOR (2019) LPELR-50961(CA) where his lordship held: “The word “shall” in its ordinary meaning is a word of command which is normally given a compulsory meaning. The word is intended to denote an obligation. The word “shall” when used in a statutory provision imports that a thing must be done. It is not merely permissive, it in mandatory. See Nwankwo v Yar Adua (2010) 12 NWLR part 1209 p 518.” ACHINEKU VS. ISHAGBA (1988) 4 NWLR (PTC 89) 411, MR. JOHNSON OLABODE & ANOR V. MR. TUNJI ROWLAND & ORS (2017) LPELR-51198(CA), IFEDAYO OLARINDE V. MRS. BENEDICTA NKEMDILIM ODEKINA & ANOR (2024) LPELR-62803(CA), AGBITI VS NIGERIA NAVY (2011) 2 SCNJ 1 at 5, AMOKEODO VS IGP (1999) 6 NWLR (PART 607) 457 and KATTO VS CBN (1991) 9 NWLR (PART 214) 126 at 147 alongside a plethora of authorities all assert this principle. It therefore follows that the word “Shall” used here implies a command and the binding nature of the provisions of CAMA as it relates to the operations of Companies. This is the only interpretation open to the Courts here; for CAMA to take precedence over any other document, process or agreement. Going further, the Section 723(1) of CAMA 2020 under reference here also contains the words; “notwithstanding anything to the contrary contained in the Memorandum or Articles of a company”. This can only mean that where there is any conflict between CAMA and the Memorandum of a Company or its Articles, CAMA 2020 must take precedence over such Memorandum or Articles. The Apex Court had pronounced on the use of the word “notwithstanding” in NDIC Vs. Okem Ent. (2004) 10 NWLR (Pt.880) 107 at 182 where this Court, per Uwaifo, JSC (rtd), stated as follows: “When the term “notwithstanding” is used in the section of a statute, it is meant to exclude an impinging or impeding effect of any other provision of the statute or other subordinate legislation so that the said section may fulfil itself.” See further Olatunbosun v. NISER COUNCIL (1988) 3 NWLR (Pt. 80) 25: Ndaba (Nig.) Ltd v. UBN Plc (2009) 13 NWLR (Pt. 1158) 256 at 304.” See also Saraki v. FRN (2016) LPELR-40013(SC) and Obi v. INEC & Ors (2007) LPELR-24347(SC). Now, having stated the preceding, the conflict here stems from the exclusionary nature of Article 82 of the Articles of Association of the 1st Respondent when compared to the express provisions of Section 289(4) of CAMA which provides thus: “(4) The directors may elect a chairman of their meetings and determine the period for which he is to hold office, but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding same, the directors present may choose one of them to be chairman of the meeting.” I have also noted the use of the word “May” in Section 289(4) (supra). While it appears permissive, it is my considered opinion that the word “May” here simply covers the various possible scenarios where a Chairman could be elected or chosen. There is no fine distinction between the words elected and chosen here as within this context, it simply means the process of selecting a Chairman which from the wordings, exclude appointment by fiat or exclusion of other Directors. Article 82 of the Articles of Association of the 1st Respondent however limits the persons eligible for the election as Chairman of the Board of the 1st Respondent to the first Directors which includes the 2nd Respondent here. Whatever the arguments of the 2nd Respondent here, it remains the law that Articles of Association cannot override the provisions of CAMA. Yes, the Memorandum and the Articles of Association remain the agreement between the subscribers and shareholders but any such agreement must be within the confines prescribed by statute. And Article 82 of the 1st Respondent’s Articles went outside the confines of CAMA and thus, it is null and void. I therefore must resolve this Issue in favor of the Appellants and against the Respondent.” Per BASSI, J.C.A.

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