Starcola (Nigeria) Ltd & Anor. Vs Madam Taibatu Adeniji & 4 Ors (1972)
LawGlobal-Hub Lead Judgment Report
LEWIS, JSC.
In Suit No. M/135/70, the appellants took out an originating Summons which according to the heading of the Summons was on the following basis:
“IN THE MATTER OF THE COMPANIES DECREE, 1968 AND IN THE MATTER OF STARCOLA (NIGERIA) LIMITED APPLICATION MADE UNDER: (1) ORDER 102 RULES 3(1) AND 3 (2) OF THE RULES OF THE SUPREME COURT OF ENGLAND (2) SECTION 12 OF THE HIGH COURT OF LAGOS ACT.”
And sought in the Originating Summons itself the following reliefs:-
“(a) For a declaration that the five applicants and the 2nd Respondent are Joint Promoters of the Company known as STARCOLA (Nigeria) Limited, the 1st Respondent herein.
(b) For a declaration that all the Applicants are entitled to subscribe the Memorandum of Association of the said Starcola (Nigeria) Limited and are entitled jointly with the 2nd Respondent to any benefit accruing or that may accrue to the promoters of the said company.
(c) For a declaration that the 2nd Respondent as from the 11th of May, 1970 is a trustee for himself and the Applicants as beneficiaries in respect of the affairs and dealings of the said Starcola (Nigeria) Limited.
(d) For a consequential order to amend the Register of Members of the said Starcola (Nigeria) Limited so as to include the names of the 1st-5th applicants as subscribers to the Memorandum of Association of the said Starcola (Nigeria) Limited and for such further or other consequential directions as to this Honourable Court may seem fit.”
As against the respondents who were Starcola (Nigeria) Limited (the company in question) as 1st respondent and Mr. D. Alalade who was in fact a member of that company as 2nd respondent. It was the case for the applicants on affidavit evidence that they had agreed with the 2nd respondent to promote a new company in which they were all to be subscribers to the Memorandum of Association, and to be allotted shares in the newly formed company, but that, though the 2nd respondent was directed to arrange the necessary registration of the proposed company, he in fact without informing the applicants registered the company (the 1st respondent) with only the 2nd respondent and one T. Durrand as the subscribers to the Memorandum and Articles of Association. The applicants, as we have indicated, filed their summons relying on the provisions of Section 115 of the Companies Decree, 1968 (which incidentally is in pari materia with Section 116 of the English Companies Act, 1948, dealing with the rectification of the register) which reads:-
“(1) If –
(a) the name of any person is, without sufficient cause, enter in or omitted from the register of members of a company; or
(b) default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member; the person aggrieved, or any member of the company, or the company may apply to the court for rectification of the register.
(2) Where an application is made under this section, the court may refuse the application or order rectification of register and payment by the company of any damages sustained by the party aggrieved.
(3) On an application under this section the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members on the one hand and company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.
(4) In the case of a company required by this Decree to send a list of its members to the Registrar of companies, the court, when making an order for rectification of the register shall, by its order, direct notice of the rectification to be given to that Registrar.’ and Order 102 Rules 3 (1) and (2) of the Rules of the Supreme Court of England which reads:-
“3(1) An application under Section 116 of the Act for rectification of the register of members of a Company may be made by originating summons or originating motion.
3(2) No appearance need be entered to an originating summons under this rule.”
Coupled with Section 12 of the High Court of Lagos Act which reads:-
“12. The jurisdiction vested in the High Court shall, so far as practice and procedure are concerned, be exercised in the manner provided by this or any other Ordinance, or by such rules and orders of court as may be made pursuant to this or any other Ordinance, and in the absence of any such provisions in substantial conformity with the practice and procedure for the time being of her Majesty’s High Court of Justice in England.”
A preliminary objection was taken at the hearing of the summons that the reliefs sought in paragraphs (a), (b) and (c) of the summons did not fall within these provisions and that paragraph (d) was a consequential order on the first three declarations sought so that if they were not applicable that should fail. Alternatively, it was argued that if paragraph (d) stood alone then the court ought not to grant it, but Kazeem, J., found that there was no substance in the objection. The application then proceeded and in the course of it, counsel for the respondents conceded that the 1st, 2nd and 3rd applicants were promoters of the company (the 1st respondent) together with the 2nd respondent and some other people, but it was his submission that neither the 1st, 2nd nor 3rd applicants had fulfilled a condition of membership of the company by paying £5,000 each for their shares.
On the 18th of January, 1971, Kazeem, J., gave his ruling in which he summarised the problem which he thought he had to deal with in the following terms:-
“The short point for consideration in this application is whether the applicants were among the promoters of the 1st respondent company, and if so whether they are entitled to be subscribers to the Memorandum and Articles of Association of the said company. If they are subscribers, then they would by virtue of the provisions of Section 26(1) of the Companies Decree, 1968, be members of the said Company.”
He then went on to find that the applicants were promoters of the company (the 1st respondent) and that in order to determine whether the applicants were entitled to be subscribers to the Memorandum of Association, he must “look at the number of shares that entitled a person to the membership of the company”, and that the original capital of 100,000 One Pound shares was increased to 100,000 One Pound shares of which the 2nd respondent and T. Durrand each took one £1 share. The learned trial Judge then concluded his ruling by saying:-
“The applicants are said to have made various cash contributions towards the promotion of company and those facts have not been contradicted. Moreover the Articles of Association of the company permit such contribution to be capitalised and converted into shares. It is also clear that the share qualification for membership of the company is only £1 and not £5000 as contended by the respondents. Furthermore, at a meeting of the company on 23rd June, 1970 (perhaps the first after its incorporation), the 1st and 3rd applicants attended with the 2nd respondent as chairman. In what other capacity could they have attended that meeting if not as members of the company? Having regard to the facts before me, I am satisfied that the applicants are entitled to be subscribers to the Memorandum and Articles of Association of the company if they so wished. Since however by this application, they have expressed the desire to be subscribers to the Memorandum and Articles of Association, the 2nd respondent has no right as a joint promoter to preclude them from so doing. Section 26 (1) of the Companies Decree, 1968, provides as follows:-
‘The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members’ I have already held that the applicants were not only among the promoters of the said company but that they were also entitled to be subscribers to the Memorandum and Articles of Association of the Company. Having so held, the applicants are therefore by virtue of the provisions of Section 26 (1) of the Companies Decree, 1968, deemed to be members of the Company. In the circumstances, the applicants succeed and the orders sought for are hereby granted. The respondents are therefore ordered to take immediate steps to amend the Register of Members accordingly. The 1st respondent/company to pay 50 guineas costs to all the Applicants.”
It seems to us from an examination of his ruling that what the learned trial Judge was holding was that as the applicants were promoters of the company (the 1st respondent) they were entitled to be subscribers to the Memorandum of Association of the company and that by virtue thereof, Section 26 (1) of the Companies Decree, 1968, which the learned trial Judge correctly set out in the passage of his ruling which we have already quoted, automatically meant that they were members of the company. He therefore held that the applicants had ma
Other Citation: (1972) LCN/1618(SC)
