It is a trite law that company assumes a legal personality upon its incorporation. The company as an artificial person cannot act in its own person but can only act through its organs and agents. The organs of the company otherwise known as the alter ego comprise of the Board of Directors and Members in the General Meeting.

The Board of Directors comprised all the duly appointed or elected directors by the shareholders or members in the general meeting. Because of the relationship between the company and the directors which has been judicially described as that of the principal and the agent, the company mostly act through the directors as the officer/agent of the company.

Instructively, in Orji vs. Anyaso (2000) 2 NWLR (pt. 643) 1, the court held: “It is not the act of every officer of a limited liability company that binds the company as a principal. Those whose acts bind the company are the alter ego-those persons who because of their positions are the directing mind and will of the company, the very alter ego and corporate personality of the company”. Likewise, in the case of N.N.S.L vs Alhaji Hamajoda Sabana & Co. Ltd & 2 Ors. (1988) 2 NWLR (pt. 74) 23, the court held: “ A company is an abstraction. It therefore acts through living persons. But it is not the act of every servant of the company that binds the company. Those whose acts binds the company are their alter ego- those persons who because of their positions are the directing mind and will of the company, the very ego and corporate personality of the company.” The holding of the courts with regards to the position of the director appears to give the company directors the leeway to act on behalf of the company which will subsequently binds the company. But does this extend to the institution of any action in court of law on behalf of the company without the requisite authority of the company/board of directors?

Consequently, the common law position enunciated in the popular case of Foss vs. Harbottle (1843) 67 ER 189 to the effect that when wrong is committed against a company, it is only the company that can legally sue. This view by implication is the purport of section 299 of the Companies and Allied Matters Act, 1990. However since the directors of the company direct and manage the affairs of the company, it not uncommon that the directors of the company may sue or authorise the activation of court processes on behalf of the company in the best interest of the company. .

However, it must be noted that the individual director of a company lack the vire to institute or authorise the institution of action in any court of law in the name of the company without the due authorisation of the Board of Directors. This is the position of the court in Stephen Ogbebor & Sons Sawmill Ltd vs. Chief John Osamede Adun (2016) All FWLR (pt. 860) @116 22 CA. The relevant gist of the case was that Roland Ogbebor instituted an action on behalf of the company for declarative reliefs and injunctions. He testified as Pw1 in the High Court of Edo State, Benin Judicial Division. The defendant raised the competence of the PW1 to institute the action on behalf of the company without the due authorisation as an issue. The PW1 under cross-examination testified that as the Chief Executive Office he was authorised by the company to sue but never tendered any document evidencing such authority by the company. The trial court found the PW1 not competent to institute the action on behalf of the company and dismissed the action for lack of jurisdiction since the proper plaintiff was not before the court. The PW1 being dissatisfied with the trial court’s decision appealed unsuccessfully to the Court of Appeal. The Court of Appeal’s position was that where the competence of a person to institute an action in a court of law is in issue, the plaintiff has the burden of proving same when called upon to do so, otherwise the matter is deemed incompetent and liable to be struck out. The Court of Appeal relied inter alia on the Supreme Court case of Adegoke Motors Ltd vs. Adesanya (1989) 3 NWLR (pt. 109) 250.

Although, the Court of Appeal while dismissing the appeal ordered the striking out of the suit in place of the trial court’s order of dismissal. The ratio of Court of appeal by Per SAULAWA JCA: [Pp. 1118- 1119, paras E-C], is hereby reproduced as follow for the purpose of clarity:

“in the instant case, PW1, Roland Ogbebor, had testified under cross-examine, inter alia, thus:

I was authorised by the company to sue. The authority by the company will be in the office, I have list of directors, it is in my office… I have document in the office appointing me as Chief Executive Officer.’

Ironically however, throughout the period of the trial of the matter lasted at the court below, the PW1 did not deem it expedient to tender the purported document evidencing that he was actually authorised by the appellant to institute the instant action on behalf thereof. The purported letter appointing him as the Chief Executive of the Appellant equally remains a mystery, exclusively known to the PW1… This court was reported to have aptly reiterated the well settled principle to the effect thus:

‘A managing director has got no power to authorise the institution of legal proceeding in the company’s name without the requisite authority from the board of directors or shareholders… See also sections 63, 65 and 66 of the Companies and Allied Matters Act’’’.

Conclusively, I hereby submit that the ratio of the above cited case is a caveat to the company lawyers and company’s officers alike to the understanding of the requisite authority for validity of the institution of action in court on behalf of the company.

Legal Practitioner at KAZEEM A. ATITEBI & CO., BARRISTERS AND SOLICITOR