The Administrative Proceedings Committee: Dotting the i’s and crossing the t’s

There have been several notable initiatives to improve ease of doing business in Nigeria, which have resulted in the nation’s meteoric rise in the global Doing Business ranking in recent time. It is instructive that legislative instruments have been and continue to be the major intervention tools used to reposition Nigeria’s business experience within the international best practices.

Recently, the President assented to the re-enacted Companies and Allied Matters Act 2020 (“the Act”). The Act made sweeping changes to the corporate regulatory landscape, as the first comprehensive update to the company law regulations in three decades. One of the vital reforms introduced is the establishment of the Administrative Proceedings Committee (“APC”) - to ensure speedy resolution of disputes arising from the operation of the Act.

Before the amendment, the Federal High Court (“FHC”) had exclusive jurisdiction to adjudicate on disputes arising from the operation of the Act. The perennial routine procedures associated with the traditional courts hindered the speedy and efficient resolution of such disputes, consequently, impacting the ease of doing business in Nigeria. Interestingly, with the inception of APC, the exclusive jurisdiction of the FHC would be diluted to pave the way for administrative hearings of corporate disputes before the FHC’S bite at the cherry.

Although the establishment of the Act has been applauded as a valuable reform to enhance the business environment in Nigeria, a critical look at the Act and the corporate landscape will reveal a few grey areas that need to be addressed before its inauguration. The article examines the roles of the APC visa-vis similar quasi-judicial bodies, probable challenges and proposed recommendations to mitigate the identified pitfalls in its smooth operation.

Overview of the APC

The APC is established pursuant to Section 851 of the Act, with only legal practitioners and aggrieved parties having the right of audience. The APC comprises the Registrar General (RG) acting as the Chairman, and other selected members . The APC’S decisions are based on a simple majority, with the Chairman having a casting vote on a tie. Its decisions are subject to confirmation by the Governing Board of the Commission and communicated to the parties within 14 days thereafter. Subsequently, if dissatisfied, the aggrieved party may appeal to the FHC.

Administrative proceedings are not strange to disputes resolution within the corporate regulatory landscape. A similar body exists, pursuant to s. 310(1) of the Investments and Securities Act 2007, and Rule 599(1) of the Securities and Exchange Commission Rules and Regulation 2013 to hear complaints on violations of the securities law governing the capital market. Likewise, the Income Tax ( Transfer Pricing) Regulation 2018 established the Decision Review Panel (DRP), as an administrative forum to resolve disputes arising from the operation of the Regulations.

Other functional administrative bodies with the nomenclature of a Tribunal, such as the Investments and Securities Tribunal (IST) and Tax Appeal Tribunal (TAT) have similar objectives to resolve disputes on sui generis matters to enhance the commercial exigencies associated with the corporate landscape and ultimately improve the business environment.

Probable challenges to the APC

While administrative proceedings are not new to the corporate dispute resolution framework, its introduction to company law administration is a novel concept. Consequently, the APC may be bugged with some teething issues, which have been highlighted below:

i. Uncertainty on the extent of its jurisdiction

Hitherto the Act, the FHC has the exclusive jurisdiction to resolve disputes arising from the operation of the Act pursuant to section 251(1) (e) of the Constitution. The section provides: “arising from the operation of the Companies and Allied Matters Act or any other enactment replacing the Act or regulating the operation of companies incorporated under the Companies and Allied Matters Act.”

The Court construed the phrase - arising from the operation under s.251(1) (e) as “in relation to the companies incorporated under the Act, management of the company and its assets”. Thus, all disputes that border on incorporation, shareholders rights, dissolution, and internal administration of a company are considered within the ambit of the

FHC. Interestingly, s. 851(4)(b) of the Act adopts a similar phrase on the jurisdiction of the APC. By parity of reasoning, it presupposes that the APC would assume jurisdiction in similar instances as the FHC, such that a shareholder can institute a claim against a company to enforce its rights or file a derivative action before it.

The assumption of such wide jurisdiction would ultimately create unintended consequences for the APC, where every dispute arising from the operation of the Act is considered as the first port of call. More importantly, this would create a delay in the speedy resolution of disputes and further compound the ease of doing business experience. This is more so considering that the Act only envisages a centralized panel, to be led by the RG to resolve all the disputes nationwide. The RG is expected to shoulder this responsibility in addition to his day to day administrative duties as the chief executive officer of the Commission. It is also interesting to note that other designated members of the panel are full-time staff of the CAC, currently plagued by manpower shortage and slow productivity. It begs to query, whether the RG and the panel are not biting more than they can chew?

In comparison, other functional administrative bodies such as IST, APC (SEC), TAT and DRP have defined jurisdiction on their respective areas of coverage . This ensures efficiency and timely resolution of the disputes within these bodies. ii. The challenge to its jurisdiction Closely related to the point highlighted above is the imminent challenge to the jurisdiction of the APC vis-à-vis the FHC. Traditionally, the FHC and other regular courts jealously guard their jurisdiction. This is one of the bedrocks of the legal jurisprudence in Nigeria. Like every other administrative body that has been established to resolve disputes originally exclusive to the FHC and the consequent challenge . A similar fate awaits the APC to test the water on its wide jurisdiction ascribed by the Act.

Nonetheless, we expect that the appellate court would to take a purposive approach and uphold its jurisdiction, similar to what obtained with the other bodies . iii. Concern on fair hearing The composition of the APC suggests inconsistency with the fair hearing protocols, and this may rob the body of the requisite independence necessary to enhance the stakeholders’ confidence in its proceedings. According to the Act, the principal officers of the APC also doubles as the staff of the Commission, with the discretion to co-opt non-voting members. Similarly, the RG also functions as a key member of the Board saddled with the responsibility of confirming the APC decisions.

Expectedly, some of the disputes to be resolved by the APC would involve the Commission, as a party. This suggests that the RG would serve in dual capacity; the prosecutor and a judge, against the fair hearing rule. Interestingly, the Act now empowers the RG to appear in court in a case that involves the Commission. Invariably, every step of the resolution ladder, the RG takes an active step which may likely erode his neutrality, most especially in disputes where the Commission is also a party.

In comparison, the composition of other functional administrative bodies shows independence from the government agency responsible for its main action. For instance, the TAT’S Commissioners are appointed from outside the tax authorities’ current personnel by the minister, likewise, the IST members.

iv. Timeline for an appeal to the FHC

The Act provides for a right of appeal to the FHC by an aggrieved party, however, silent on the timeframe to exercise such right. This constitutes a fundamental omission, as other enabling Acts do not leave the appeal timeframe in an open wind without direction. Hopefully, the Board will address this lacuna in its forthcoming Regulations. v. Representations at the APC The Act, though grants the aggrieved parties and legal practitioners the right of audience, however, adopts a restrictive approach to representation before it. Currently, the Commission accredits chartered accountant, chartered secretary and legal practitioners to transact businesses with it on behalf of their clients. It is therefore worrisome that chartered accountant and chartered secretary are prohibited from representing their clients before the body, despite their valuable contributions to corporate administration landscape.

Besides, there is no clarity on who may represent an aggrieved corporate party “in person” before the APC. Should it be assumed that this is subject to the internal mechanism of the company? It would be prudent if the Commission highlights the officers that may represent a company before it to clear the wave of confusion on the issue.

Practice in other jurisdiction

South Africa

The South African companies disputes resolution is a multi-tier forum with the Companies and Intellectual Property Commission (CIPC), and the Companies Tribunal (“the Tribunal”) at the base.

The CIPC is the regulatory agency for companies and intellectual property registration. It enforces compliance and adjudicates on elementary issues arising from the Companies Act.

On the other hand, the Tribunal is established as a South Africa Department of Trade and Industry’s agency, to adjudicate on disputes from the operation of the Companies Act. The Tribunal has a defined jurisdiction which covers; name disputes, directorship disputes, review of the CIPC decision, exemption, AGM, alteration of Memorandum of Incorporation etc. The Tribunal sits independently of the Company Registry, with nine members drawn from the academia and practitioners. Its decisions are enforceable through the High Court; however, an aggrieved party may appeal to the High Court, which serves as the final court for review.

India

The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are the principal bodies for the resolution of companies related disputes.

The NCLT sits in benches across India with two officials, while the NCLAT sits as an appellate court over NCLT’S decisions. The two fora are superintended by a judge or justice of the Supreme Court of India. The NCLAT’S decisions can be appealed to the Supreme Court on a point of law. In recent time, the NCLT and NNCLAT model has been adopted within the Asian region to moderate their companies’ disputes.

Conclusion

The establishment of the APC has been touted as one of the sweeteners to enhance the business experience in Nigeria, with timely resolution of disputes arising from the operation of the newly enacted CAMA. It has been widely noted that the APC would minimize the delays and bottlenecks associated with the adjudication of corporate matters at the FHC, provide an avenue for the involvement of experts in the decision-making process and encourage collaboration by relevant stakeholders. However, the highlighted teething issues can pose challenges to the smooth administration of the body.

We are hopeful that the Governing Board of the Commission would issue guidelines to set the framework for the APC and clarify grey areas identified above and many more.