*Says “Company Assets Are Separate From Shareholder’s Personal Estate”
The Court of Appeal has held that a person appointed as an interim administrator of a deceased person’s estate does not, by that appointment alone, become the personal representative of a deceased shareholder for the purpose of instituting proceedings over the company in which the deceased held shares.
The court reached the decision in Mr. Seyi Sowemimo, SAN & 3 Ors. v. Mr. Bode Johnson & 7 Ors., determined by the Lagos Division in a panel comprising Nimpar, Hassan and Bassi, JJCA.
By an order of the High Court of Lagos State made on 9 December 2010, Mr Seyi Sowemimo, SAN, Alhaji A.O. Shote, Mrs Stella Marie Awani and Mr J.B. Okele were appointed interim administrators pendente lite of the estate of the late Mr Fredrick Egbe, a majority shareholder in Ikoya Properties Limited, who died intestate.
The appointment arose from a dispute over the administration of the estate, which had prompted one of the deceased’s sons, Peter James Asifo-Egbe, to institute a suit.
While that suit was still pending and the appointing order was itself being contested on appeal, Madam Catherine Efejukwu and Bernadette Adebisi George commenced a fresh action at the Federal High Court, Asaba, where they obtained an ex parte order appointing Efejukwu a director of the company. She then convened a meeting at which Bernadette Adebisi George, Fumilayo George and Mosopefoluwa George were appointed directors.
The appellants responded with the present suit, challenging the appointments as procured by fraud and misrepresentation and seeking reliefs to protect the deceased’s interests in the company. The first, second and seventh respondents objected on grounds of locus standi and abuse of court process. The trial court upheld the objection and dismissed the suit without going into its merits, and the appellants appealed.
The issue was whether administrators pendente lite are vested in law with the standing to sue under the Companies and Allied Matters Act to protect and preserve the rights of a deceased shareholder.
Counsel for the appellants argued that the appointment clothed them with the powers of general administrators and made them personal representatives of the deceased for the purpose of protecting his interests in the company. He submitted that the statutory definition of “personal representative” is inclusive rather than restrictive, and wide enough to cover interim administrators appointed pendente lite, so that registration as members of the company was not a precondition to suit.
He further submitted that, as personal representatives, they were entitled to take all necessary steps to preserve the deceased’s interest pending final determination of the estate dispute, and that the authorities relied on by the respondents were decided under a narrower statutory regime. Separate Letters of Administration were unnecessary, he argued, because the appointing order remained valid, subsisting and unsuspended, and was itself sufficient evidence of authority to act for the estate.
For the respondents, it was contended that the appointment did not, without more, confer the status of personal representatives in relation to the company. The deceased’s shares remained distinct from his personal estate and could only be dealt with in accordance with company law requirements, so that the appellants first had to show that the shares had been properly transmitted or transferred to them, or that they had been duly recognised in the requisite capacity.
Counsel added that the suit in which the appellants were appointed did not concern the company, which is a separate legal entity from the deceased, and that the right to sue over the company’s affairs belonged either to the company itself or to its members, neither of which the appellants were.
The Court of Appeal resolved the issue in favour of the respondents.
The court emphasised that the assets of a company are separate and distinct from the personal estate of its shareholders. The appointment of interim administrators over the estate therefore did not, without more, vest them with authority to manage the company’s affairs or to sue in respect of its assets, and their powers over the estate could not extend to the company merely because the deceased held shares in it.
The court emphasised that the assets of a company are separate and distinct from the personal estate of its shareholders. The appointment of interim administrators over the estate therefore did not, without more, vest them with authority to manage the company’s affairs or to sue in respect of its assets, and their powers over the estate could not extend to the company merely because the deceased held shares in it.
Applying that principle, the court held that until the appellants produced Letters of Administration or other legally recognised evidence of representation to the company, and were entered in its register of members, they could not be treated as the deceased’s personal representatives in relation to his shareholding. They were accordingly not competent to invoke the relevant provisions of CAMA or to maintain the action, having commenced it without first acquiring the legal status required to sue in respect of the shares.
Seyilayo Ojo, SAN, with Emesomi Igietseme, appeared for the appellants. Olukunle Bamidele appeared for the third to seventh respondents.