The announcement of a new legislation in Nigeria came as expected even though it should have been brought earlier than now, however, a fundamental observation was made as to the new position of this legislation of which I will like to canvass on. Let me defiance off gravity scope alittle, it is pertinent to state that the 2020 Companies and Allied Matters Act has repealed the 1990 Companies and Allied Matters Act, the effect of this means that the 1990 Act ceases to exist, making the 2020 the law in force, take note it was not amended. It is very encouraging that the age-long law has been retired after three decades.
Hence disserting, by virtue of the new 2020 CAMA, section 98 states that a company may have a common seal but need not have one, and where a company has a common seal, the design and use of that seal shall be regulated by the company’s articles and it shall have its name engraved in legible characters on the seal this is as oppose to the previous provision of CAMA, section 74 of the then 1990 law provides a company shall have a common seal the use of which shall be regulated by the articles.
The import of Common seal out-going
I had the privilege of a perusal before the bill was passed, it is however imperative to know that the rationale behind the common seal gradually becoming an old practice in corporate governance was for the ease of work and to reduce excess formalities in while doing businesses, so by this the common seal practice is taking a back seat in our businesses today.
The position of common seal today
Furthermore, a question was asked at a web seminar few days ago before passing into law the 2020 CAMA which was, ‘does the absence of a seal on any document witnessing the transactions entered into by a company render that document invalid and thus rendering the transaction null and void? Of which I answer that question ANON. Furthermore reproducing the provision of Section 77 of CAMA 1990, which reads thus: “A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be under its common seal unless otherwise so required in this Part of Act” the position was also taken from the Court of Appeal decision of SPDC (NIG) LTD v. ALLAPUTA (2005) LPELR-11183(CA)
The current position of the authority above has been replaced with section 101 of the 2020 CAMA which says “A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be signed as a deed unless otherwise so required in this Part and that an electronic signature is deemed to satisfy the requirement for signing under this section.” A close observation was made to that effect that a common seal has be replaced with a deed. I failed not to state that a document is now validly executed by a company as a deed and thus if such is duly executed by that company, it should be delivered as a deed.
Can due execution be made without common seal?
An uncircumscipted question was raised in a Business Conference Meeting as to if ‘a document can be said to be duly executed in the presence of a director & secretary of the company which is described as deed to take the same effect without a common seal? The answer is Yes, without a company seal it will be taken as duly executed, see 102 (3) of the 2020 CAMA
Hence the present law is that “a company may execute a document described or expressed as a deed without affixing a common seal on the document by signature on behalf of the company by a director, secretary of the company or at least two directors of the company or a director of the company in the presence of at least one witness who shall attest the signature. Suffice to say it is duly executed. See 102(2) of 2020 CAMA.
The position has been altered as it was in the case of NITEL Plc. v. Rochonoh Prop. Co. Ltd pages 473-508 (1995) 2 NWLR (Pt 378). Pg 506, para B wherein Justice NIKI TOBI stated “that for the due execution of company document there must be a common seal, signatures of the parties and their witnesses and finally delivery.” In light of the above it now not mandatory to use a common seal, the sweetness in this is that the ease of running a company is at a lesser cost and create speedy work to be done, the cost of having a company common seal is now laid to rest as a deed will take it place.
The Court of Appeal decision in SPDC (NIG) LTD v. ALLAPUTA (supra) which Per ADEREMI, J.C.A. stated that “there’s requirement that the seal of a company shall be affixed to any document is to authenticate the validity of any transaction entered into on behalf of the company” that position now stands as an old law, a seal is no longer a requirement.
Share certificate having a common seal
It is now the law that a document signed in a deed manner as a certificate can now stand as a prima facie evidence of a title of a member to his/her shares without the import of a company’s common seal. See Section 172 of the 2020 CAMA, where it provides that ‘A certificate, under the common seal of the company (where the company has a common seal) or otherwise signed as a deed by the company, specifying any share held by any member, is a prima facie evidence of the title of the member to the shares’ which has opposed the 1990 CAMA under section 146 (3) ‘Every certificate issued by a company shall be under the company’s seal and shall specify the shares to which it relates and the amount paid up on them’ See Also section 147 1990 CAMA.
The standing of common seal in Nigeria today
A light glance at the provision of section 840 CAMA 2020, The common seal, if any of the body corporate shall have such device as may be specified in the constitution, and any instrument to which the common seal of the corporate body has been affixed in apparent compliance with the regulations for the use of the common seal shall be binding on the corporate body, notwithstanding any defect or circumstance affecting the execution of such instrument. Therefore it is baetulus to have a common seal and not comply with the rules that guide the usage of common seal.
The place of an official seal if company has a common seal
An official seal its worthy of note to state that in cases where companies have common seal, a deed or other document to which an official seal is duly affixed shall bind the company as if it has been sealed with the common seal of the company. Section 99 (5) 2020 CAMA. This was however not the position in the former repealed law where it made a mandatory use of common seal on document as to give ripple effect of the official seal, see section 75 (5) 1990 CAMA.
Conclusion
Without iconoclastically wrestling the previous positions common seal in Nigeria, it is advantageous that an opportunity was presented to ouster the mandatory use of common seal, making it optional. I was being pusillanimous about the outcome of the 2020 CAMA, but we can indeed say it is a welcome law in Nigeria’s 21st century law making. The stringent standing of common seal by its progenitor has been waved by the wind of a deed.
