It is not illegal to operate business names (trade names) and incorporated trustees (associations, societies, clubs, religious groups, not-for-profit organizations and non-governmental organizations) without registering them with or at the Corporate Affairs Commission (CAC). It is not mandatory to register them, although the benefits of registration are enormous. However, unlike business names (some types of business names) and incorporated trustees, it is mandatory to register companies (including foreign companies), unless the President of Nigeria grants an exemption.
Corporate Affairs Commission (CAC) is created by a federal law (Companies and Allied Matters Act). It is in-charge of registration and regulation of companies, business names and incorporated trustees in Nigeria. While, business names and incorporated trustees must not be registered to be legal, the moment they are registered, they are bound to be controlled and regulated by the CAC. Below are answers to the question; that where CAC registers an entity (company, business name or incorporated trustee) can CAC on its own deregister such entity?
“Deregistration” is the striking off of a company from the register of companies by the CAC or the removal of a business name from the register of business names by the CAC, for not being in operation. The CAC does not need a court order for a deregistration. Deregistration is not a dispute resolution mechanism, rather a tool for cleaning the registers of Companies and Business Names at the CAC. Other than for the above reason, the only approved means of terminating any registered entities with the CAC is by dissolution for companies, removal of name for business names and dissolution for incorporated trustees. Note that the CAC needs a court order before it can dissolve (terminate) an incorporated trustee. Being a statutory body created by law, CAC cannot act outside, above or beyond its statutory powers and duties under the establishing law. All actions of CAC must be within the law, if not, such actions will be a nullity and dead on arrival.
Under the law, CAC has powers to establish a registry of companies and regulate/supervise the registration, management and winding-up (termination) of companies. It also has powers to deregister a company, where it reasonably believes that the company is not carrying on business or is not in operation and the company has refused/failed to respond to status inquiry of CAC for at least two (2) months and 2 weeks.
The CAC has powers to establish a registry of business names (trade names) and regulate/supervise the registration, management and dissolution/cessation (termination) of business names. Where CAC reasonably believe that a business name is not carrying on business or is not in operation and the business name has refused/failed to respond to status inquiry of CAC for at least two (2) months, the CAC has powers to deregister such business name (remove the business name from the register of business names).
Furthermore, the CAC has powers to accept application from a person or more representing groups of persons, associations, societies, clubs, religious groups, not-for-profit organizations and non-governmental organizations, for registration as a corporate body. Upon registration such entities become among other things, corporate bodies, that can sue and be sued, that can contract and that can acquire, sell and own landed property. A careful study of “PART C” of the Companies and Allied Matters Act, reveals that unlike in “Part A for companies” and “Part B for business names”, there is no power vested on the CAC to deregister incorporated trustees (associations, societies, clubs, religious groups, not-for-profit organizations and non-governmental organizations). Rather the law expects the CAC to approach a court of law, where the CAC wishes to dissolve an incorporated trustee. The only reasons that a court may allow dissolution of an incorporated trustees include; that the aims and objectives of the entity has been realized and there is no need to keep the entity, the aims and objectives have become illegal, the entity was formed for a specific period and the period has expired or that it is just and equitable to dissolve the entity. The court will have to hear the petition for dissolution to be filed by CAC and must invite the persons that will be affected by the dissolution.
Generally, all entities registered in the CAC can be dissolved and terminated, however the dissolution of an incorporated trustee must be with an order of court. Companies and Business Names can be deregistered unilaterally by the CAC without an order of Court. However, incorporated trustees (including associations, societies, clubs, religious groups, not-for-profit organizations and non-governmental organizations), CANNOT be deregistered. Deregistration is unknown to “PART C” of the Companies and Allied Matters Act and as such cannot be imported by the CAC or exercised by the CAC on any incorporated trustee. Any attempt to exercise a non-existing power is illegal and unlawful, hence actions based on such illegality are nullified and dead on arrival. You cannot place something on nothing and expect it to stand. The law remains the law, until it is amended or repealed by the legislatures.
My authorities are:
1. Sections 1, 7, 18, 19, 37, 525, 570, 572, 573(2), 575, 576, 578, 590, 596, 608 and 613 of the Companies and Allied Matters Act, 1990.
2. The judgement of the Supreme Court (on “at what point will a company cease to exist”) in the case of OREDOLA OKEYA TRADING CO. & ANOR v. BANK OF CREDIT & COMMERCE INT’L & ANOR (2014) LPELR-22011(SC)
3. The judgement of the Supreme Court (on “incorporated and unincorporated organizations [corporation aggregate bodies and organizations]”) in the case of ONUEKWUSI & ORS v. REGISTERED TRUSTEES OF THE CHRIST METHODIST ZION CHURCH (2011) LPELR-2702(SC)
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