This article will be looking at the recent controversy in the interpretation of sections 314 – 322 most specifically sections 314 and 315 of the Companies and Allied Matters Act (Cap C20), LFN (2010) (CAMA) with respect to the authority given to the Corporate Affairs Commission (CAC) to investigate the affairs of private and public companies. In appraising this case, the various sections of the law which are the subject of dispute will be set out, as well as a brief overview of the case, issues identified by parties, submissions made by the various parties and ultimately the differing rulings made by the Trial Judge and Court of Appeal Judge.


SECTIONS 314 – 315, CAMA

  1. Investigation of a company on its own application or that of its members
    (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 not less than one quarter of the class of shares issued;
    (b) in the case of a company not having a share capital, on the application of not less than one quarter in number of the persons on the company’s register of members; and
    (c) in any other case, on 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.
  2. Other investigations of company
    (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 be so investigated.
    (2) The Commission may make such an appointment 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; or
    (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; or
    (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) of this section shall be without prejudice to the powers of the Commission under section 322 of this Act, and the power conferred by subsection (2) of this section shall be exercisable with respect to a body corporate, notwithstanding that it is in a course of being voluntarily wound up.
    (4) Reference in subsection (2) of this section to a company’s members, includes any of the following persons‐
    (a) the personal representatives of a deceased member; and
    (b) any person to whom shares have been transferred or transmitted by operation of law.


The Corporate Affairs Commission (CAC) as the regulatory body established as per the Companies and Allied Matters Act[1], wrote to various commercial banks requesting them to furnish to them records of all loan transactions and documentation between the banks and public and private companies in Nigeria between 1st January, 2008 and 31st December, 2010. The various banks however failed to comply with the demand on the ground that compliance would be a breach of their confidentiality duty to their customers and also that the Appellant had failed to obtain an order of Court in this regard.


At the trial court, two out of the three reliefs sought by the Claimant were granted. The relief which the court declined to grant was “an order directing the Defendants to comply with the inspection exercise schedule of the Claimant by supplying the information sought by the Claimant.” Aggrieved with this decision the Claimant proceeded to file a Notice of Appeal on two grounds.

The sole issue identified for the determination of the appeal in the Appellant’s brief was:
“Whether in carrying out its function, under section 7 of CAMA with particular reference to Sections 197 (1), 198 (1), 199 and 315 (2) of CAMA, the Claimant, requires a Court Order.”

In the 1st (United Bank for Africa Plc), 4th (First City Monument Bank Plc) and 5th (Sterling Bank Plc) Respondents’ brief the sole issue nominated was:

“Whether based on the provisions of Section 315(1) and (2) of CAMA  the Appellant has the power to carry out investigation of the affairs of the Respondent without first obtaining an order of Court (Ground 2 of the Notice of Appeal)”

In the 2nd Respondent’s (WEMA Bank Plc) brief the sole issue nominated was:

“Whether or not the Learned Trial Judge correctly construed the provisions of Sections 314315(1) & (2) of CAMA in arriving at the conclusion that the Appellant requires an enabling Court Order for the appointment of an inspector before it can demand from the Respondent Information on the charges created by the Respondents’ Customers and third parties.”

In the 3rd Respondent’s (Citibank Nigeria Limited) brief the sole issue nominated was:

“Whether without an order of Court, the Appellant can request the 3rd Respondent to allow it to carry out “special inspection exercise” on all loan transactions and documentation between the 3rd Respondent and its customer especially public and private companies pursuant to Sections 7197198199 and 315 to 322 of the CAMA?”

In the 6th Respondent’s (Zenith Bank Plc) brief the sole issue nominated was:

“Whether the learned trial Judge was right in striking out/dismissing RELIEF 3 of the Plaintiff/Appellant’s claim.”

Based on the similarity in the issues raised by all parties, the main issue considered for determination by the Court of Appeal was set out as:

“Whether the Appellant has the power to carry out an investigation of the affairs of the any of the respondents or any company under Section 315(1) and (2) of CAMA , without first obtaining a Court order? “


Appellant submitted;

  • That the Appellant when acting in the execution of its functions underSection 7, particularly with regard to Sections 197(1) and 315(2) of CAMA does not require a Court order to proceed.
  • That it is the duty of the Court to give effect to an Act of Parliament in the words used by Parliament.
  • That the provisions ofSection 314 and 315(2) of CAMA must be read together as the provisions clearly show that different circumstances are in contemplation of the legislator when those provisions were framed.
  • That the sections should be interpreted as follows;
  • Section 314 provides for circumstances when the Appellant MAY undertake an investigation at the instance of or application by members of a company
  • Section 315(1)deals with circumstances when the Appellant SHALL undertake an investigation by Order of a Court and
  • Section 315(2)deals with circumstances when the Appellant MAY undertake an investigation suo motu, “if it appears to it” that circumstances enumerated under Paragraph (a) – (d) of that section exists.
  • That the cardinal duty of any Court of law in the interpretation of statute is to decipher the intention of the Legislature. CitingOMOIJAHE v. UMORU [2]to support this view.
  • That the use of the words ‘SHALL’ and ‘MAY’ respectively in sections 315(1) and 315(2) is indicative of the intention of the legislature to create two scenarios of how the powers of the Appellant to appoint competent inspectors for the purpose of investigation of a company may be exercised.
  • That the trial judge erred when it held that the Appellant had failed to meet the threshold required for the court order in respect of relief.

1st Respondent submitted;

  • That the trial Judge was right in refusing the 3rd relief of the Plaintiff/Appellant’s claim based on the provision ofSection 315 (1) and (2) of CAMA. That by the said provision of CAMA, the Plaintiff/Appellant is empowered to appoint one or more inspectors to investigate the affairs of a company where the Court having the appropriate jurisdiction declares that the company’s affairs ought to be investigated by an inspector appointed by the Plaintiff/Appellant.
  • That it is only where a Court order has been obtained against the particular company that an inspection may be ordered by the Plaintiff/Appellant.
  • ThatSection 315 (2) cannot be construed in isolation from Section 315 (1). Citing B.N. v. FAJEBE FOODS LTD[3] to support this view.
  • That where the language of a statute is clear and unambiguous, the Courts must give the words their ordinary meaning. Citing VICTOR ADEGOKE ADEMUMI & ANOR v. ATTORNEY GENERAL OF EKITI STATE & 6 ORS[4] and OJOKOLOBO v. ALAMU [5] to support this.
  • That there was no evidence contained in the Plaintiff/Appellant’s Affidavit in support of the originating Summons that a Court order has been sought or that any of the special circumstances mentioned inSection 315 (2) of CAMA has taken place in respect of the inspection.
  • That allowing the Plaintiff/Appellant or any other body not empowered/authorized by law to investigate the loan transactions between the 1st Respondent and any company would amount to breach of banker/customer confidentiality. The bank owes an implied duty to its customers not to divulge information about its customers to a third party, and that such disclosure can only be done with the authorization of the account holder and also under specific circumstance.
  • That there is no Court order that places an obligation to disclose on the 1st Respondent[6] and there is no section of CAMA that empowers/authorizes the Appellant to inspect the loan books of the 1st Respondent.

2nd Respondent submitted that;

  • That the powers vested in the Appellant are to be exercised within limited circumstance/scope.
  • ThatSection 315 (2) cannot be construed in isolation of Section 315 (1) of the same Act, and there is a legislative presumption in favour of the fact that a Section of an enactment deals with the same and not different issues.
  • That the learned trial Judge rightly construedSection 315 (1) & 315 (2) of CAMA conjunctively with the result that the Appellant has no independent power to appoint an investigator/inspector without prior order of the Court and that the Appellant was precluded from approaching the 2nd Respondent for information on the charges/securities created by the 2nd Respondents’ Customers. SUNDAY v. INEC[7] and RIVERS STATE GOVT. v. SPECIALIST KONSULT[8] were cited to support this point.
  • That there is a presumption against concurrent vesting of powers of appointment in two separate bodies/organs simultaneously and that there can be no concurrent power of appointment of investigator vested in the Appellant and the Court simultaneously.
  • That the issue at stake touches on the privacy of various companies and the substance of confidentiality. The confidentiality of transactions is the cornerstone of the relationships between the Respondent and her customers, and that the confidentiality is guaranteed by the Constitution, Statute, and Common law and that clear words which are devoid of ambiguities are required to take away these rights.
  • That the Appellant acted ultra vires its powers when it embarked on the investigation without fully complying with the letters and spirit ofSection 315 (2) of CAMA.
  • ThatSection 315 (1) can only be utilized to investigate a particular/specific company and not to investigate many nameless corporate customers of the 2nd Respondent.

3rd Respondent submitted that;

  • Where a statute provides that before a statutory power is exercised certain conditions must be satisfied, that power cannot be exercised unless those conditions have been satisfied, and where a statute prescribes a particular method of exercising a statutory power, only that method should be adopted.
  • That the Appellant is required to obtain an order of Court for it to obtain the requested information from them and there is no Court order directing that their affairs should be investigated pursuant to which the Appellant can appoint inspectors to investigate their affairs. AROWOLO v. ADESINA[9]was cited amongst others to support this point.
  • That where the words of a statute are clear and unambiguous, the Court must give them their ordinary and plain meaning and that the Courts are not entitled to read into a statute words which are expressly or impliedly excluded from it.
  • That by Section 314 of CAMA, the Appellant cannot exercise its power of appointment of the inspectors over the affairs of the 3rd Respondent unless an application by the 3rd Respondent itself or by its members holding not less than one-quarter of the class of shares issued have been made to the Appellant, and this is not the case here.
  • That Section 315 (1)and (2) cannot be read disjunctively or in isolation but as a whole and the Court cannot make an order unless and until the circumstances enumerated under Section 315 (2) of CAMA has been satisfied.

4th Respondent submitted that;

  • thatSection 315 does not give the Appellant a legal or statutory right to demand or request an investigation of the nature being canvassed by the Appellant but rather enjoins the Appellant to apply for an Order of Court where it has been able to prove or give evidence that any of the instances listed under Section 315 (2)
  • That the 4th Respondent has discretion and not an obligation by law, to register the particulars of a charge created by any of its customers.
  • That where a statute has prescribed a remedy for a certain inaction, or infraction that is the only remedy that is available for the alleged infraction of the statute.
  • That where an issue in a statute is governed by a general provision and a specific provision, the latter will be invoked in the interpretation of the statute before the Court
  • That where the provisions of a statute are clear and unambiguous, the Court must give those provisions their literal and ordinary interpretation.
  • That the 4th Respondent is bound to observe strict confidentiality between itself and its customers.

5th Respondent submitted;

  • that the Appellant cannot carry out any investigation of its affairs or that of any other company without first obtaining a Court order pursuant toSection 315 (1) and (2).
  • thatSections 7197198, and 315 – 322 of CAMA must be read together to enable the Court arrive at a just interpretation of these sections.
  • That where provisions of a statute on an issue carry both general and specific provisions, the specific provision will be had recourse to.
  • That the Appellant misinterpreted the law when it argued that the decision to investigate underSection 315 (2) (a) – (d) of CAMA is the commission’s and not the Court – the whole section must be read together.
  • That an Order of Court underSection 315(1) of CAMA is a condition precedent for the Appellant to do any of the things under Section 315 (2) of CAMA. Thus the Appellant have not complied with the mandatory requirement of obtaining Court order.

6th Respondent submitted;

  • That the trial Court was right in striking out Relief 3 of the Plaintiff/Appellant’s claim.
  • That the 6th Respondent is bound to observe confidentiality between it and its customers since the Plaintiff/Appellant failed to obtain a Court order. TURNER V. ROYAL BANK OF SCOTLAND PLC[10]was cited amongst others to support this point.
  • That the 6th Respondent has no obligation under CAMA to disclose information of transactions between it and all its customers when the customers are not under investigation by inspectors duly appointed by the Plaintiff/Appellant; the obligation to disclose such confidential information can only arise when the Plaintiff/Appellant has appointed inspectors to investigate the affairs of an identified company which company must be a customer of the 6th Respondent and such inspectors need further clarification on the register of the Company.
  • That the 6th Respondent will be in breach of its confidentiality obligation with its customers/companies (both private and public companies) if it divulges any information about its customers without their consent or a Court order[11].
  • That the 6th Respondent is not an agent of companies to which it lends money upon registrable charge over the assets of such companies. The agency relationship implied by law between the 6th Respondent and its customers is only limited to their banker/customer relationship. YESUFU V. AFRICAN CONTINENTAL BANK[12]and ANGYU V. MALAMI [13] were cited to support this point.
  • That relying onSections 7197199, and 315 – 322 of CAMA counsel the Appellant cannot by itself or through its appointed inspectors demand for the information on loan transactions and documentation between 6th Respondent and its corporate customers suo motu without a Court Order or consent of the shareholders of a company.
  • thatSection 315 (2) must be read in conjunction with Section 315(1) and that CAMA does not give the Appellant power to investigate the affairs of 6th Respondent without a Court Order as provided in Section 315 (1) under the circumstances in Section 315 (2) of the Act.

The various submissions made by the 6 Respondents basically bordered on 3 main points, which can be said to be:

  1. That the sections 314, 315 (1) and (2) of CAMA ought to be read in conjunction with each other.
  2. That obtaining a court order is a prerequisite for the obtainment of documents from companies by CAC.
  3. That adherence to the request of CAC by the Respondents will amount to a breach of confidentiality between the Respondents and their customers.


At the court of first instance, the learned trial judge was of the opinion that there are 2 instances upon which the Plaintiff can appoint inspectors by the application of Sections 314 – 315 and 317 of CAMA. He set them out as follows:

  1. Section 314 of CAMAdeals with the circumstances when the investigation may be undertaken by the Commission at the instance of a Company or certain class of its members.
  2. Section 315deals with when investigation shall be undertaken upon the direction of a Court.

He was of the view that Section 315 (2) does not vest any power on the Plaintiff to undertake an investigation suo motu. Furthermore, that investigation under Section 315(2) shall only be undertaken upon the directions of the Court as provided in Section 315 (1) CAMA and that before the Plaintiff can seek an order under Section 315(7), any one of the circumstances in Section 315(2) must exist.

The ruling of the trial Judge satisfied the position of the Respondents as this was in line with the submissions they had made. However, the presiding Justices at the Court of Appeal had an alternative view on the interpretation of the intention of the legislature in introducing the law and the draftsman in couching it.

In the judgment, the Court of Appeal in addressing the duty of the court held that it was the duty of the court to interpret the provisions of a statute in the clear tenor of the words contained in it. ADESANOYE & ORS v. ADEWOLE[14]  and KRAUS THOMPSON ORG. v. N.I.P.S.S [15] were cited to support this view. The court further emphasised the importance of endeavouring to construe the provisions of Section 314 and 315 of CAMA in a way as to discern the real intention of the draftsman.

The interpretation given to the sections were as follows:

  • Section 314(1) that the Appellant, 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.
  • Section 314(2)– provides the instances (and upon whose application) the appointment may be made, that is, on application of members holding not less than one-quarter of the class of shares issued; on application of not less than one quarter in number of the persons on the company’s register of member; and on application of the company.
  • Section 314(3)– prescribes that the application in subsection (2) shall be supported by such evidence as the Commission may require.

So essentially, while Subsections (1) & (2) gives the Commission discretion as to the appointment of the inspectors, Subsection (3) makes it mandatory that the application which MAY be considered by the Commission pursuant to Subsection (2) SHALL be supported by any evidence that may be required by the Commission for the appointment of such inspectors.

The court further explained that the provision of section 314 of the Act relates exclusively to powers conferred upon the Commission as to the appointment of inspectors. Therefore, no order of court is needed before inspectors will be appointed pursuant to section 314 of the Act.

With respect to Section 315(1) of the Act, the court explained that, the Commission is granted similar power as under Section 314(1) to investigate the affairs of a company.

  • However, under Section 315(1), the Commission must obtain order of Court before such appointment will be made. Meanwhile, such order of the Court must declare that the affairs of the company in question be so investigated.
  • Section 315 (2)apparently gives the Appellant the discretion to appoint inspectors to investigate the affairs of a company in circumstances that falls under the Paragraphs (a) to (d). Therefore, before the Appellant Commission can exercise the discretion granted unto it under Subsection (2), it must be shown that either of the provision of Paragraphs (a) to (d) had been satisfied.

The court contended that there would not have been any need for the draftsman to include Sections 314(1) and 315(2) in the Act if the legislature intended strictly that the Appellant shall only undertake an investigation of a company incorporated under the Act pursuant to an order of Court.

With reference to the Appellant’s submission in respect of the use of the words ‘SHALL’ and ‘MAY’, the court held that while the use of the word ‘SHALL’ in Section 315(1) presupposes the mandatory requirement of a Court order by the Commission before it can appoint inspectors, the use of the word ‘MAY’ in Section 314(1) and 315(1) presupposes the permissive discretion granted in favour of the Appellant subject to certain conditions prescribed there under.

In response to the submissions raised by the Respondents regarding the perceived breach in confidentiality, the court in explaining the rationale for the necessity of investigation cited LORD DENNING in NORTHWEST HOLST v SECRETART OF STATE FOR TRADE[16]

“… It sometimes happens that public companies are conducted in a way which is beyond the control of ordinary shareholders. The majority of the shares are in the hands of two or three individuals. These have control of the company’s affairs. The other shareholders know little and are told little. They receive glossy annual reports. Most of them throw them into wastepaper basket. There is an annual general meeting but few shareholders attend. The whole management and control is in the hands of the directors. They are a self-perpetuating oligarchy; and are virtually unaccountable. Seeing that the directors are the directors are the guardians of the company, the question is asked: quis custodiet ipsos custodies? Who will guard the guards themselves?”

In other words the court held that the essence of the specific and distinct provision of Section 315(2) was to allow the Appellant Commission as the regulatory body set up (through inspectors appointed) engage in what is deemed to be an “in house cleaning” of the company records and also decide the line of action to take, most especially in cases where there is deliberate and misleading information found as a result of the investigation. Hence to construe the provision otherwise will result in rendering the commission as a ‘toothless bulldog’ contrary to the intendment of the draftsman.

Further on the issue of confidentiality the court held that the Act has clearly made provision backing the exercise embarked upon by the Appellant. It held that a fortiori, registration of charges with the Appellant by companies under Section 197 of CAMA as well as other like registrations under the Act undoubtedly renders the record of charges a public document, and what the Commission through the inspectors may in essence do will be to ascertain the correctness and authenticity of the records at its disposal.

The summary of the above construction of the combined provision of Section 314 and 315 of the Companies and Allied Matters Act is that there are three ways and manner by which inspectors who are saddled with the responsibilities of investigating the affairs of a company may do so[17]. These include:

(1) Appointment of inspectors on application of members of a company or the company itself under Section 314 (2);

(2) Appointment of inspector(s) by order of Court under Section 315(1) and;

(3) Appointment of inspector(s) by the Commission on its own motion (that is, the Appellant) under Section 315(2).



Whilst the concerns raised by the Respondents and Trial Judge are considered logical to an extent the ruling of the Court of Appeal is very solid as it expressly seeks out the intention of the legislature in the creation of the law and it further draws our attention to the mischief the legislature was looking to override in the creation of the law.

The Court of Appeal ruling validates the power vested in the CAC by virtue of CAMA. Requiring CAC to seek an order from the court before inspecting the corporate affairs of any company essentially limits the power of the commission. The existence of the commission should serve the purpose of lessening the burden on the courts in regards to the regulation of the affairs of companies, thus preserving the intervention of the courts for graver concerns that arise in the course of their duty. Requiring direct permission from the court for every inspection would be strenuous, lengthy and certainly contrary to the intention of the legislature, hence making the ultimate decision of the court laudable.



[1] Section 7,Companies and Allied Matters Act, Cap C20, LFN 2010

[2] (1999) 8 NWLR (PT 614) 178 at 188

[3] (1998) 6 NWLR Pt. 554, pg. 380 at 401 – 402.

[4] (2002) 2 NWLR (Pt. 751) Pg. 474 at 512

[5] (1987) 3 NWLR (Pt. 61) 379

[6] Jackson V. Royal Bank Of Scotland (2005) UKHL 3

[7] (2009) 12 NWLR (Pt. 1154) 194

[8] 2005) 7 NWLR (Pt. 923) 145 at 179, Para E-F;

[9] (2011) 2 NWLR (Pt. 1231) 315

[10] (1999) 2 ALL ER (COMM.) 664

[11] Ibid. 6

[12] (1982) 1 SC 74 AT 92

[13] (1992) 9 NWLR (pt.246) 242

[14] (2006) 14 NWLR (PT 100) 242; (2006) LPELR – 143 (SC), 27, paras A – E

[15] (2004) 17 NWLR (PT 901) 44; (2004) LPELR – 171 (SC) pp. 11 – 12, paras G – B

[16] (1978) 3 ALL ER 280

[17]  J. OROJO, Company Law and Practice in Nigeria, 5th Edition, LexisNexis Butterworths, (2008), p. 221

By Adaeze Egwuagu-Chijioke

Author: chas