Grounds
upon Which the Corporate Affairs Commission may Refuse to Register a Company
By section 36 of CAMA, the grounds upon which incorporation maybe
refused are;
· Non-compliance of name
with CAMA
· Illegal object or business
· Incompetent/disqualified
subscriber
· Conflict of name with
existing name
· Non-compliance with the
requirements of another law regulating registration.
Note that Notice of Refusal to Register must be sent by CAC to the
applicant within 30 days.
For emphasis, please note
that by section 36 of CAMA, the Corporate
Affairs Commission shall register the Memorandum and Articles unless in its
opinion:
·
They
do not comply with the provisions of CAMA; or
·
The
business which the company is to carry on or the objects for which it is formed
or any of them are illegal; or
·
Any
of the subscribers to the memorandum is incompetent or disqualified in
accordance with S. 20 of the Act; or
·
There
is non-compliance with the requirement of any law as to registration and
incorporation of a company; or
·
The
proposed name conflicts with or is likely to conflict with an existing trade
mark or business name registered in Nigeria
Procedure for Challenging CAC's Refusal to
Register a Corporate Name
Where a practitioner
believes that he has complied with S. 35
of CAMA and other requisite regulatory laws/guidelines, and that the
refusal to register an organization he presented to CAC was unjustified, there
is a clear cut remedial steps to take as stipulated under S. 36(2) of CAMA as follows:
1.
Give notice to CAC to apply to court for directions in respect
of its decision, within 21 days of receipt of the CAC’s refusal to register the
organization.
2.
After 21 days without positive reaction from CAC, then apply
to the Federal High Court for determination of the compliant.
3.
The court upon determining the matter can direct CAC to
register the company/organization as presented or with certain amendments.
4.
The court order is annexed to incorporation documents and
returned to CAC for filing and registration of the organization.
5.
CAC is bound to comply with the court order and register the
organization and issue the Certificate of Registration/Incorporation.
It is important to note
that the procedure to adapt to challenge the CAC’s decision depends on the
stage at which the refusal was made and for what reason. If it was based on
refusal to approve and reserve corporate name during Availability Check and Reservation
of Name under S. 32 CAMA, the
appropriate procedure is to take up direct action by Originating Summons for
Declaration and Order of mandamus compelling, CAC to accept the proposed Name.
But, if the refusal is based on the contents of Memo and Articles of
Association or other documents of incorporation, the appropriate procedure is
as stated under section 36(2) CAMA.
Additionally, the legal
significance for the distinction between the procedure to adopt when
challenging the refusal of CAC to approve and reserve Corporate Name under section 30 of CAMA and refusal to
register the organizations documents and issue certificate of incorporation
under section 36(2) of CAMA was
illustrated in the case of CAC v. AYEDUN
(2005) 15 NWLR (Pt. 95) 39 and AMASIKE
v. REGISTRAR GENERAL, CAC (2006) 3 NWLR (Pt. 968) 46.
In Ayedun’s Case, the
court held that section 30 of CAMA
dealing with names of companies to be registered contains no provision
requiring CAC to apply to court for directions. Rather, it gives CAC the discretion
in the registration or rejecting to register a name based upon certain
criteria, and that it is when those criteria are not adhered to or the
discretion improperly exercised that the court can interpret.
Again, the statutory
remedy for an aggrieved party on refusal to register an organization by CAC
under section 36(2) of CAMA is not
available for an aggrieved person over conflict of registered names under section 31 of CAMA. For instance, under
section 31 of CAMA, the owner of a
subsequently registered corporate name conflicting with an already existing
corporate name, business name or trade mark, can be compelled by CAC to change
the name despite the error on the part of CAC in approving and registering the
new name.
Yet
still, there is no statutory remedy, equivalent to section 36(2) of CAMA, where the aggrieved owner of the
subsequently registered corporate name which has been forced to change its name
under section 31(1)(4) CAMA can
challenge CAC and get remedy for negligent misstatements in approving the name
pursuant section 32 of CAMA and
registering the company pursuant to section
36 of CAMA, which name later turn out to be already existing; but for the
fault of the newly registered company or its promoters.
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