ABSTRACT
This article clarifies and comprehensively explains the legal principles surrounding individual liability for corporate actions in Nigeria. It also aims to identify the relationship between the Company and the individual to the extent of their rights, the legal framework governing corporate conduct, and the exemptions.
INTRODUCTION
Before discussing if an individual can bear a company's liability as if he was the one who committed the offense, we need to understand what a company is and its relationship with the individual who is a part of the Company. A company is defined by PART A of CAMA 2020 as a legal entity or person separate and distinct from its members (Owners) who came together with a common goal or objectives. From the definition, it can be understood that a company's liability differs from that of its members (Owners). This Act establishes a distinct legal entity for the corporation, separate from its owners and managers. This distinction serves a vital purpose: it shields the personal assets of individuals involved from being directly seized to satisfy the Company's debts or legal obligations, as seen in the famous case of Salomon V. Salomon. However, to a certain extent, there are exemptions where more than the shield of the law will be necessary. However, the crux of this study is narrowed to the effect of arrest, which connotes the criminal law aspect of the legal system. This will allow us to view the position of the Administrative Criminal Justice Act 2015 regarding arrest in lieu. Section 7 of the ACJA 2015 states
"A person shall not be arrested in place of a suspect."
The provision of the ACJA can be interpreted literally as unlawful to arrest a person as a suspect in place of a person sought for an offense committed. A company is an entity recognized as a person under the law; therefore, it means an individual can't be arrested in its place. The question is to what extent will this law be valid. Remember, when it comes to criminal law, unlike Civil law, it is the state against an individual. The individual is believed to be capable of committing a crime. A company is a juristic person who is artificial; it can't be seen but known. Is an artificial person capable of committing a crime?
CORPORATE CRIME AND THE LEGAL FRAMEWORK
As an artificial being, the company cannot be said to commit a crime capable of being committed by natural humans. However, there are certain crimes the company is said to be capable of committing, which is known as corporate misconduct. Corporate misconduct has been a significant problem in Nigeria, where instances of it range from financial fraud to noncompliance with regulations. These unethical acts undermine public confidence in corporate institutions and hurt the economy. Overcoming these problems requires individual responsibility, which is essential since it guarantees that people who commit wrongdoing within organizations or approve of it will be held accountable. It encourages moral corporate conduct and discourages wrongdoing in the future. Understanding Nigeria's criminal law, regulated by laws like the Criminal Code Act (for the southern states) and the Penal Code (for the northern states), forms the basis of the country's legal framework for handling corporate misbehavior. Even though these rules are extensive, they initially intended to deal with individual crimes rather than corporate offenses. Nonetheless, several statutory instruments have corporate accountability provisions, such as the Companies and Allied Matters Act (CAMA) and the Economic and Financial Crimes Commission (EFCC) Act. These laws permit the prosecution of corporate corporations and their officers for financial crimes, including money laundering, corruption, and fraud.
However, Nigeria's corporate legal system frequently fails to enforce personal accountability, allowing many criminals to get away with very little punishment. Improving the enforcement systems is necessary to reduce corporate crime successfully.
Effective legal frameworks that target organizations and the people who work for them can result in more significant accountability and deterrence. Therefore, to ensure that justice is done and corporate governance is improved, the principles of individual liability under Nigeria's corporate laws must be strengthened.
CAN AN INDIVIDUAL BE ARRESTED IN LIEU OF A COMPANY?
Since the corporate legal personality principle permits a company to be treated as a distinct legal entity from its employees and shareholders in many jurisdictions, a company can be held accountable for crimes committed under its name without necessarily involving specific employees. This results from the vicarious liability rule, which is based on the master/employer answering to his servant's/employee's actions since the servant/employee is carrying out the act during the employment. As stated in the section 93 of the CAMA 2020
"Where, by sections 89-93 of this Act, a company would be liable to a third party for the acts of any officer or agent, the company shall, except where there is collusion between the officer or agent and the third party, be liable notwithstanding that the officer or agent has acted fraudulently or forged a document purporting to be sealed by or signed on behalf of the company."
That being said, there are specific situations in which an employee may be held personally accountable and even placed under arrest for crimes committed by the company. As a result of the elements entailed in proving a crime: actus reus and mens rea.
A staff member may be held personally liable under the vicarious liability theory if they violate company policy while acting in their work and to benefit the business, mainly if their actions were motivated by criminal intent. For instance, executives or staff members directly implicated in fraud, embezzlement, or environmental problems may face legal action.
In Nigeria, under the principle of individual liability. The Criminal Code Act and Penal Code give law enforcement agencies the authority to detain and prosecute those who commit financial crimes within corporate settings. The Economic and Financial Crimes Commission (EFCC) Act also allows law enforcement agencies to arrest and prosecute those who commit financial crimes in corporate settings. These people may be held criminally liable by the law, notably if they served as the corporation's "directing mind" (Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705).
However, in most instances, the firm would be subject to fines or other sanctions instead of its personnel being arrested unless the person's involvement is established. The relevant jurisdiction's legal system determines the details. In Nigeria, where corporate corruption and criminal activity exist, an individual may be arrested rather than a firm. Through the thoughtful formulation of regulatory rules, the nation's regulatory framework seeks to maintain business vitality and avert market failures. Nigeria's institutional arrangements impact corporate governance regulations, as they can either support or impede regulatory efforts. Governments must create corporate governance regulations that meet particular needs and uphold recognized standards of ethical business conduct. (Ellis) (Adegbite) (Adegbite)
CONCLUSION
In Conclusion, the concept of corporate legal personality often shields people from being held accountable for the transgressions of a firm. However, there are several circumstances in which executives or employees might be charged with a crime and even taken into custody, especially regarding the vicarious liability theory. Although the corporate legal personality principle provides a safeguard, it should not be used to keep wrongdoers from facing the consequences. To prevent corporate crime and increase public confidence in the legal system, Nigeria must fortify its legal frameworks and enforcement, guaranteeing that individuals and corporations are held responsible for their deeds.
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- Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705.
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- What is Company Law in Nigeria? (CAMA) | Abbakin.com. What is Company Law in Nigeria? (CAMA) | Abbakin.com. https://abbakin.com/what-is-a-company-in-nigeria-law/
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
