Investigations and inspectors under CAMA 2020: when and how a company is investigated

(1) The Commission may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as it may direct.

(2) The appointment may be made—

(a) in the case of a company having a share capital, on the application of members holding at least one-tenth of the class of shares issued ;

(b) in the case of a company not having a share capital, on the application of at least one-tenth in number of the persons on the company’s register of members ; and

(c) in any other case, on the application of the company.

(3) The application shall be supported by such evidence as the Commission may require for the purpose of showing that the applicant or applicants have good reason for requiring the investigation.

(4) Where a company’s employee, in compliance with an inspector’s request, provides the inspector with any information concerning the company’s affairs, the company shall protect the employee from any form of discrimination or other unfair treatment.

(5) Any employee relieved of his employment without any just cause, other than for reason of disclosure made pursuant to the provision of this section, is entitled to a compensation which is calculated as if he had attained the maximum age of retirement or had served the maximum period of service, in accordance with his terms of employment or conditions of service to the company.

Open section 357 on its own page

(1) The Commission shall appoint one or more competent inspectors to investigate the affairs of a company and report on them in such manner as it directs, if the Court, by order declares that its affairs ought to be investigated.

(2) Notwithstanding the provisions of sections 357 and subsection (1) of this section, the Commission may appoint one or more competent inspectors to investigate the affairs of a company and report on them in such manner as it directs, if it appears to it that there are circumstances suggesting that—

(a) the company’s affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or in a manner which is unfairly prejudicial to some part of its members ;

(b) any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose ;

(c) persons concerned with the company’s formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members ; or

(d) the company’s members have not been given all the information with respect to its affairs which they might reasonably expect.

(3) Subsections (1) and (2) are without prejudice to the powers of the Commission under section 366, and the power conferred by subsection (2) is exercisable with respect to a body corporate, notwithstanding that it is in a course of being voluntarily wound up.

(4) Reference in subsection (2) to a company’s member, includes—

(a) any of the personal representatives of a deceased member ; and

(b) any person to whom shares have been transferred or transmitted by operation of law.

Open section 358 on its own page

(1) If an Inspector appointed, under section 357 or 358, to investigate the affairs of a company thinks it necessary for the purposes of his investigation to investigate the affairs of another body corporate which is or at any time been the company’s subsidiary or holding company, or a subsidiary of its holding company or a holding company of its subsidiary, he shall report on the affairs of the other body corporate so far as he thinks that the results of his investigation of its affairs are relevant to the investigation of the affairs of the company first mentioned above.

(2) An inspector appointed under either section 357 or 358 may at any time in the course of his investigation, without the necessity of making an interim report, inform the Commission of matters coming to his knowledge as a result of the investigation tending to show that an offence has been committed.

Open section 359 on its own page

(1) When an inspector is appointed under section 357 or 358, it is the duty of both past and present officers and agents of the company, and all past and present officers and agents of any other body corporate whose affairs are investigated under section 359, to—

(a) produce to the inspector all information, books and documents of or relating to the company or, as the case may be, the other body corporate, which are at their disposal, in their custody or power ;

(b) appear before the inspector when required to do so ; and

(c) give the inspector all assistance in connection with the investigation which he is reasonably able to give.

(2) If the inspector considers that a person other than an officer or agent of the company or other body corporate is or may be in possession of information concerning its affairs, he may require that person to produce to him such information, books or documents at his disposal, under his custody or power relating to the company or other body corporate, to appear before him and give him all assistance in connection with the investigation which he is reasonably able to give, and it is that person’s duty to comply with the requirement.

(3) An inspector may examine on oath the officers and agents of the company or other body corporate, and any such person as is mentioned in subsection (2) in relation to the affairs of the company or other body, and administer an oath accordingly.

(4) In this section, a reference to officers or to agents includes past and present officers or agents, as the case may be, and “agent” in relation to a company or other body corporate, includes its bankers and solicitors and persons employed by it as auditors, whether these persons are or are not officers of the company.

(5) An answer given by a person to a question put to him in exercise of powers conferred by this section (whether as it has effect in relation to an investigation under any of sections 357-359 as applied by any other section in this Act) may be used in evidence against him.

(6) Where any officer or agent of the company, or any other person refuses to answer any question put to him by the inspector, or provide any information, books or documents at his disposal, under his custody or power with respect to the affairs of the company, or other body corporate, the inspector may apply to Court for contempt proceedings against the officer, agent or person.

Open section 360 on its own page

(1) If an inspector has reasonable grounds for believing that a director, or past director, of the company or other body corporate whose affairs he is investigating maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in Nigeria or elsewhere, into or out of which there has been paid—

(a) the emoluments or part of the emoluments of his office as such director, particulars of which have not been disclosed in the financial statements of the company or other body corporate for any financial year, contrary to the provisions of Part V of the Second Schedule to this Act (in relation to particular in accounts of directors) ;

(b) any money which has resulted from or been used in the financing of an undisclosed transaction, arrangement or agreement ; or

(c) any money which has been in any way connected with an act or omission or series of acts or omissions, which on the part of that director constituted misconduct whether fraudulent or not towards the company or body corporate or its members, the inspector may require the director to produce to him all documents in the director’s possession, or under his control, relating to that bank account.

(2) For purposes of subsection (1) (b) of this section, an “undisclosed” transaction, arrangement or agreement is one the particulars of which have not been disclosed in the financial statement of any company or in a statement annexed thereto for any financial year, including the disclosure of contracts between companies and their directors.

Open section 361 on its own page

(1) When an inspector is appointed under section 357 or 358 to investigate the affairs of a company, the following applies in the case of—

(a) any officer or agent of the company ;

(b) any officer or agent of another body corporate whose affairs are investigated under section 359 ; and

(c) any such person as is mentioned in section 360 (2).

(2) Section 360 (4) applies with regards to references in subsection (1) to an officer or agent.

(3) If that person—

(a) refuses to produce any book or document which it is his duty under section 360 or 361 to produce, or

(b) refuses to appear before the inspector when required to do so, the inspector may certify the refusal in writing and apply to the Court for contempt proceedings against the person.

(4) The Court may thereupon enquire into the case, and after hearing any witness who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, the Court may punish the offender in like manner as if he had been guilty of contempt of the Court.

Open section 362 on its own page

(1) The inspector may, and if so directed by the Commission shall, make interim reports to the Commission, and on the conclusion of his investigation shall make a final report to it and any such report shall be written or printed, as the Commission may direct.

(2) The Commission may direct that a copy of the inspector’s report be forwarded to the company at its registered or head office.

(3) Where an inspector is appointed under section 357 in pursuance of an order of the Court, the Commission shall furnish a copy of any of its reports to the Court.

(4) In any other case, the Commission may, if it deems fit—

(a) furnish a copy on request and on payment of the prescribed fee to—

(i) any member of the company or other body corporate which is the subject of the report,

(ii) any person whose conduct is referred to in the report,

(iii) the auditors of that company or body corporate,

(iv) the applicants for the investigation, and

(v) any other person whose financial interests appear to the Commission to be affected by the matters dealt with in the report, whether as creditors of the company or body corporate, or otherwise ; and

(b) cause any such report to be printed and published.

Open section 363 on its own page

(1) If, from any report made under section 363, it appears to the Commission that any civil proceeding ought in the public interest to be brought by the company or anybody corporate, the Commission may itself bring such proceedings in the name and on behalf of the company or the body corporate.

(2) The Commission shall indemnify the body corporate against any costs or expenses incurred by it in or in connection with proceedings brought under this section, and any costs or expenses so incurred shall, if not otherwise recoverable, be defrayed out of the Consolidated Revenue Fund.

Open section 364 on its own page

(1) If, from any report made under section 363, it appears that any person has, in relation to the company or anybody corporate whose affairs have been investigated by virtue of section 359, been guilty of any offence for which he is criminally liable, the report shall be referred to the Attorney-General of the Federation.

(2) If the Attorney-General of the Federation considers that the case referred to him is one in which a prosecution ought to be instituted, he shall direct action accordingly, and it is the duty of all past and present officers and agents of the company or other body corporate, (other than the defendant in the proceedings), to give all assistance in connection with the prosecution which they are reasonably able to give.

(3) If, from any report made under section 363, it appears to the Commission that proceedings ought, in the public interest, to be brought by any body corporate dealt with by the report for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of that body corporate or the management of its affairs, or for the recovery of any property of the body corporate which has been misapplied or wrongfully retained, it may refer the case to the Attorney-General of the Federation for his opinion as to the bringing of proceedings for that purpose in the name of the body corporate and if proceedings are brought, it shall be the duty of all past and present officers and agents of the company or other body corporate (other than the defendants in proceedings), to give him all assistance in connection with the proceedings which they are reasonably able to give.

(4) Costs and expenses incurred by a body corporate in or in connection with any proceedings brought by it under subsection (3) shall, if not otherwise recoverable, be defrayed out of the Consolidated Revenue Fund.

Open section 365 on its own page

If, in the case of any body corporate liable to be wound up under this Act, it appears to the Commission from a report made by an inspector under section 363 that it is expedient in the public interest that the body corporate should be wound up, the Commission may (unless the body corporate is already wound up by the Court) present a petition for it to be wound up if the Court considers it just and equitable to do so.

Open section 366 on its own page

(1) The expenses of, and incidental to, an investigation by an inspector appointed by the Commission under the provisions of this Act, are defrayed in the first instance out of the Consolidated Revenue Fund, but the following persons are, to the extent mentioned, liable to make repayment,—

(a) any person who is convicted on a prosecution instituted, as a result of the investigation by the Attorney-General of the Federation, or who is ordered to pay damages or restore any property in proceedings brought under section 365 (3), may, in the same proceedings, be ordered to pay the said expenses to such extent as are specified in the order ;

(b) any body corporate in whose name proceedings are brought under section 365 (3) is liable to the extent of the amount or value of any sums or property recovered by it as a result of those proceedings ; or

(c) unless, as the result of the investigation, a prosecution is instituted by the Attorney-General of the Federation, the applicants for the investigation, where the inspector was appointed under section 357, are liable to such extent, if any, as the Commission may direct, and any amount for which a body corporate is liable under paragraph (b), shall be a first charge on the sums or property mentioned in that paragraph.

(2) For the purposes of this section, any costs or expenses incurred by the Commission in or in connection with proceedings brought by virtue of section 364 (2), is treated as expenses of the investigation giving rise to the proceedings.

(3) Expenses to be defrayed by the Commission under this section are, so far as not recoverable are to be paid out of the Consolidated Revenue Fund.

Open section 367 on its own page

(1) A copy of any report of an inspector appointed under sections 357 and 358, certified by the Commission to be a true copy, is admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.

(2) A document purporting to be such a certificate as mentioned in subsection (1) shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

Open section 368 on its own page

(1) Where it appears to the Commission that there is good reason so to do, it may appoint one or more competent inspectors to investigate and report on the membership of any company, and otherwise with respect to the company, for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence the policy of the company.

(2) The appointment of an inspector under this section may define the scope of his investigation, whether in respect of the matter or the period to which it is to extend or otherwise, and in particular may limit investigation to matters connected with particular share or debenture.

(3) Where an application for an investigation under this section with respect to particular share or debenture of a company is made to the Commission by members of the company, and the number of applicants or the amount of the shares held by them is not less than that required for an application for the appointment of an inspector under section 357 (2) (a) and ( (a) the Commission shall appoint an inspector to conduct that investigation, unless it is satisfied that the application is vexatious ; and

(b) the inspector’s appointment is not excluded from the scope of his investigation any matter which the application seeks to include, except in so far as the Commission is satisfied that it is reasonable for the matter to be investigated.

(4) Subject to the terms of an inspector’s appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of his investigation.

Open section 369 on its own page

(1) For the purposes of any investigation under section 369, the provisions of sections 359-363 apply with the necessary modifications to references to the affairs of the company or those of any body corporate, that—

(a) the said sections shall apply in relation to all persons who are or have been, or whom the inspector has reasonable cause to believe to be or have been, financially interested in the success or failure or the apparent success or failure of the company or any other body corporate whose membership is investigated with that of the company, or able to control or materially to influence the policy thereof, including persons concerned only on behalf of others, as they apply in relation to officers and agents of the company or of the other body corporate, as the case may be ; and

(b) the Commission is not bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof if he is of the opinion that there is good reason for not divulging the contents of the report or any part thereof, but shall keep a copy of any such report, or, the parts of any report, as regards which he is not of that opinion.

(2) The expenses of any investigation under section 369 shall be defrayed out of the Consolidated Revenue Fund.

Open section 370 on its own page

(1) Where it is made to appear to the Commission that there is good reason to investigate the ownership of any share in or debenture of a company and that it is unnecessary to appoint an inspector for the purpose, the Commission may require any person who it has reasonable cause to believe to—

(a) be or to have been interested in those shares or debentures ;

(b) act or to have acted in relation to those shares or debentures as a legal practitioner or an agent of someone interested therein ; or

(c) give to the Commission any information which the person has or might reasonably be expected to obtain as to the present and past interest in those shares or debentures and the names and addresses of the persons interested, and of any persons who act or have acted on their behalf in relation to the shares or debentures.

(2) For the purposes of this section, a person is deemed to have an interest in a share or debenture if he has any right to acquire or dispose of the share or debenture or any interest therein or to vote in respect thereof, or if his consent is necessary for the exercise of any of the rights of other persons interested therein, or if other persons interested therein can be required or are accustomed to exercise their rights in accordance with his instructions.

(3) Any person who fails to give any information required of him under this section, or who, in giving any such information, makes any statement which he knows to be false, or recklessly makes any statement which is false commits an offence and liable to a penalty as the Commission shall specify in its regulations.

Open section 371 on its own page

(1) Where, in connection with an investigation under section 369 or 371, it appears to the Commission that there is difficulty in finding out the relevant facts about any share (whether issued or to be issued), and that the difficulty is due wholly or mainly to the unwillingness of the persons concerned, or any of them, to assist the investigation as required by this Act the Commission may in writing direct that the shares shall, until further notice, be subject to the restrictions imposed by this section.

(2) If shares are directed to be subject to the restrictions imposed by this section—

(a) any transfer of those shares, or in case of unissued shares, any transfer of the right to be issued therewith and any issue thereof, is void ;

(b) no voting rights are exercisable in respect of those shares ;

(c) no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of shares ; and

(d) except in a liquidation, no payment shall be made of any sums due from the company on those shares, whether in respect of capital or otherwise.

(3) Where the Commission directs shares to be subject to restrictions under this section, or refuses to direct that shares shall cease to be subject thereto, any person aggrieved thereby may appeal to the Court, and the Court may, if it deems fit, direct that the shares shall cease to be subject to the said restrictions.

(4) Any direction or order of the Court that shares shall cease to be subject to restrictions under this section, expressed to be made with a view to permitting a transfer of those shares, may continue the restrictions mentioned in subsection (2) (c) and (d), either in whole or in part, so far as they relate to any right acquired or offer made before the transfer.

(5) Any person who—

(a) exercises or purports to exercise any right to dispose of shares which, to his knowledge, are for the time being subject to restrictions under this section,

(b) votes in respect of such shares, whether as holder or proxy, or appoints a proxy to vote in respect thereof, or

(c) being the holder of such shares, fails to notify that they are subject to the said restrictions, commits an offence and is liable to a penalty as the Commission shall specify in its regulations.

(6) Where shares in any company are issued in contravention of the said restrictions, the company and each officer of the company who are in default commits an offence and is liable to a penalty as the Commission shall specify in its regulations.

(7) A prosecution shall not be instituted under this section except by or with the consent of the Attorney-General of the Federation.

(8) This section applies in relation to debentures as it applies in relation to shares.

Open section 372 on its own page

Nothing in this Part requires disclosure to the Commission or to an inspector appointed by it, by a—

(a) legal practitioner of any privileged communication made to him in that capacity, except as regards the name and address of his client ; or

(b) company’s banker as such, of any information as to the affairs of any of their customers other than the company.

Open section 373 on its own page