Elections; A Company Cannot Donate Its Funds Or Property For Political Purposes

Elections A Company Cannot Donate Its Funds Or Property For Political Purposes.

Elections; A Company Cannot Donate Its Funds Or Property For Political Purposes.

By Nwakor Oluchukwu N. Gospel

At every election season, individuals are desirous of supporting various persons, political parties or associations with their finances, their properties, etc so as to show solidarity and unflinching support for their preferred candidates /aspirants. This is well recognized both by the Constitution of the Federal Republic of Nigeria, 1999 as amended and the Electoral Act 2022, as a right of citizens who are either aspirants or not.

These individuals, who are desirous of showing their supports for their political choices, are owners of various companies, or they occupy different positions as managing directors or other kinds of directors, auditors, secretaries and as members. Hence, the need to ensure adequate enlightenment on what is permitted for a company to do by the various enactments that regulate the affairs of a company.

Generally, the effect of registration of a company is that the company becomes a legal and separate entity distinct from its members. This principle has been judicially blessed by the cases of Tsoka Oil & Marketing v. U.T.C. (Nig) Plc (2002) 12 NWLR (pt 782), S.T.B. Plc v Olusola (2008) 1 NWLR (pt 106) and the celebrated case of Salomon v Salomon (1897) A. C. 22. The implication of this is that the registered company is empowered to do certain things that a natural person of a full capacity can do, ranging from owning properties, seeking redress in court, having perpetual succession, e.t.c., for the furtherance of its business. (Section 42, 43(1) Companies and Allied Matters Act, 2020 (CAMA 2020)

However, unlike actual natural persons, under the Companies and Allied Matters Act, 2020, a company cannot directly or indirectly make a donation or gift of any of its properties or funds to a political party or political association or for any political purposes irrespective of how much they are willing to show support for that political party, association or purpose. The implication of this is that a company cannot hold a meeting or pass a resolution whether by the board of directors or members in a general meeting which empowers the company to donate or gift its property or funds to a political party or institution or for a political purpose. Section 43(2) CAMA 2020

The punishment for breaching this provision of the law is that the officers in default and the any member who voted for the breach shall be jointly and severally liable to refund the company the sum or value of the donation of gift. Additionally, every such officer or member commits an offence and is liable to a fine equal to the amount or value of the donation or gift.

CONCLUSION

It is advised that such officers or members of a company who are desirous of supporting a political purpose by donation or gift of property or funds should do so individually and as their natural selves carefully detached from the affairs of the company.

REFERENCES:

Companies and Allied Matters Act 2020 (CAMA)

Constitution of the Federal Republic of Nigeria, 1999 as amended

Electoral Act 2022

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