Position Of the Law on Right of Appeal from The Investments and Securities Tribunal to The Court of Appeal

CASE TITLE: SMTECH COMMUNICATIONS PLC & ORS v. SEC & ORS (2023)
LPELR-61006(CA)
JUDGMENT DATE: JULY 20, 2023
PRACTICE AREA: COMPANY LAW
LEAD JUDGMENT: ONYEKACHI AJA OTISI, J.C.A

SUMMARY OF JUDGMENT:

INTRODUCTION:

This appeal borders on Investment and Securities Matters

FACTS:

The 1st Appellant, which embarked on a private placement of its shares, alleged that the 2nd Respondent, which had acted as the Issuer, refused to render its statement of balance and transfer proceeds of its said private placement exercise. The 2nd Respondent alleged that it had issued loans to the 2nd and 5th Appellants to buy additional shares in the 1st Appellant’s private placement exercise. In respect of these loans, which were not backed by actual cash, the 1st Appellant had issued a guarantee for the loans. The 2nd Respondent therefore failed to avail the 1st Appellant of the proceeds of the private placement exercise.

The 1st and 5th Appellants sued the 2nd and 5th Respondents in the Federal and State High Courts to determine the legal existence of the alleged loans and the availability of the 1st Appellant’s funds. The 1st Appellant, through its lawyers, also issued a complaint to the 1st Respondent, alleging that the 2nd–5th Respondents failed to grant their access to their private placement proceeds account.

The Enforcement and Compliance Department of the 1st Respondent carried out a preliminary investigation into the matter, and upon review of the documents involved in the transactions, the Appellants and the 2nd–5th Respondents were alleged to have violated certain provisions of the Investments and Securities Act (ISA) 2007, the 1st Respondent’s Rules and Regulations 2000 (as amended), and the Code of Conduct for Capital Market Operators and Their Employees. Upon these findings by the 1st Respondent, the Appellants and the 2nd–5th Respondents were invited to appear before the Administrative Proceedings Committee (APC) of the 1st Respondent to explain why sanctions should not be imposed on them for the alleged violations and infractions.

On 4/5/2011, the APC came out with its findings and decisions, in which both the appellants and the 2nd–5th respondents were found liable in different proportions to the allegations against them. Dissatisfied with the decision of the APC, the appellants appealed to the Investments and Securities Tribunal (IST) on grounds contained in their Notice of Appeal filed on 6/6/2011 at the Registry of the lower tribunal.

The Tribunal considered the appellants’ appeal and, on 10/12/2012, delivered its judgment, in which the appeal succeeded in part. Further dissatisfied with the findings and decision of the Tribunal, the appellants lodged an instant appeal. The respondents cross-appealed.

ISSUE(S):
The issues for determination in the main appeal were found to be incompetent.
The first respondent cross-appeal was determined on:

1. Whether the Tribunal was right when it ordered the Cross Appellant to refund the sum of N4,000,000.00 (four million naira) to the 1st–5th Cross Respondents contrary to the provisions of ISA 2007, which authorize the Cross Appellant to charge administrative costs or fees under the relevant provisions of the Investment and Securities Act
2. Whether the Tribunal was right when it ordered the Cross Appellant to refund the sum of N4,000,000.00 (four million naira) to the 1st–5th Cross Respondents, irrespective of the fact that the 1st–5th Cross Respondents did not seek or ask for such a refund in their prayers or reliefs contained in the Notice of Appeal before the Tribunal

The 2nd–5th respondents cross-appeal was determined on:

1. Whether the 2nd Cross-Appellant can rightly be said to have withheld the Shareholders Register of the 1st Respondent to the cross-appeal and consequently violated Rule 43 of the Securities and Exchange Commission Rules and Regulations, 2000, as amended
2. Whether the award of penalty, cost, compensation, and interest against the 2nd Cross Appellant is justified by any known law in Nigeria.”

DECISION/HELD:
The main appeal was struck out for incompetence. The cross-appeals were dismissed.

RATIOS:
• APPEAL – RIGHT OF APPEAL– Whether a right of appeal is a creation of statute or conferred by statute
• APPEAL – RIGHT OF APPEAL– Right of appeal from the decision of the Investments and Securities Tribunal
• ACTION – PRE-ACTION NOTICE – Nature of a pre-action notice
• ACTION – PRE-ACTION NOTICE – Whether the Securities and Exchange Commission must be served with pre-action notice before filing an action or an appeal against its decision at the Investment and Securities Tribunal, can non-compliance be waived?
• COMPANY LAW – SECURITIES AND EXCHANGE COMMISSION – Whether the Securities and Exchange Commission is entitled to charge for the administrative cost of proceedings before it
• COMPANY LAW – SECURITIES AND EXCHANGE COMMISSION – Position of the law on the jurisdiction of SEC to award costs to itself during its Administrative Proceedings Committee (APC) proceedings
• COMPANY LAW – SECURITIES AND EXCHANGE COMMISSION – Power of SEC to impose penalties for violation of the provisions of the ISA and order compensation in favour of anyone who has suffered any loss as a result of same