In a case that began with a challenge to the regulation of religious associations, the Court of Appeal has placed important limits on how far the state can reach into the affairs of incorporated trustees
The Court of Appeal in Abuja has upheld the nullification of eight provisions of the Companies and Allied Matters Act 2020 that gave the Corporate Affairs Commission extensive powers over incorporated trustees, including churches, mosques, charities, professional bodies and other voluntary associations.
In a unanimous judgment delivered on September 17 but made public with the release of the certified true copy this week, a three-member panel held that Sections 839, 842, 843, 844, 845, 846, 847 and 848 of CAMA were inconsistent with the constitutional freedoms of thought, conscience and religion, association, and peaceful assembly guaranteed under Sections 38 and 40 of the 1999 Constitution.
The court also upheld the right of Emmanuel Ekpenyong, the lawyer who brought the challenge, to institute the action.
But the judgment did something more nuanced with Section 851.
Rather than leave the Federal High Court’s wholesale invalidation of that provision untouched, the appellate court preserved the Administrative Proceedings Committee’s administrative and regulatory functions while removing its power to determine justiciable disputes at first instance, exclude the Federal High Court and impose penalties as though it were a court.
The result is a decision with consequences extending well beyond the religious organisations that featured prominently in the controversy.
It raises a basic question about the architecture of Nigerian regulation: How much control can an administrative agency exercise over a voluntary association before regulation becomes an interference with constitutional liberty?
The power that triggered the lawsuit
The controversy centred largely on Section 839.
Under the 2020 Act, the CAC was given power, in specified circumstances, to suspend trustees of an association and appoint an interim manager or managers to administer its affairs.
The circumstances included alleged misconduct or mismanagement, the need to protect or properly apply the association’s property, public interest concerns and fraudulent administration. The provision also contemplated investigations and, in certain circumstances, the removal of trustees.
There was a safeguard: Section 839 itself contemplated court involvement in several forms of intervention, and subsection 11 required ministerial approval before the Commission exercised its powers under the section.
But the breadth of the regulatory architecture alarmed religious and civil-society organisations when CAMA 2020 came into force.
The concern was not simply whether trustees should be accountable.
Few serious arguments can be made against accountability where charitable or religious organisations hold property, receive donations, employ people or operate funds on behalf of members and the public.
The more difficult issue was who should decide when an association’s internal administration had crossed the legal line, and what machinery the state could deploy before a court had determined the dispute.
A challenge filed almost immediately after CAMA became law
Ekpenyong filed the suit in August 2020, shortly after President Muhammadu Buhari signed CAMA into law.
The case, FHC/ABJ/CS/1076/2020, was brought against the National Assembly, the Corporate Affairs Commission and the Attorney-General of the Federation.
He challenged Sections 839, 842, 843, 844, 845, 846, 847, 848 and 851, arguing that the provisions violated fundamental rights protected by the Constitution, particularly freedom of thought, conscience and religion and freedom of association and peaceful assembly.
His challenge also invoked constitutional provisions concerning judicial power and access to court.
The Federal High Court, presided over by Justice James Omotosho, agreed with him in a judgment delivered on April 18, 2023.
The court held that the powers given to the CAC to regulate and administer incorporated trustees under the challenged provisions were excessive and infringed constitutionally protected rights.
It struck down Sections 839, 842, 843, 844, 845, 846, 847 and 848, as well as Section 851.
The CAC appealed.
Three years later, the Court of Appeal has substantially upheld that judgment.
Why the Court of Appeal rejected the CAC’s position
The CAC challenged the Federal High Court decision on several grounds, including the argument that Ekpenyong
lacked the legal standing to bring the action.
The appellate court rejected that objection.
But its reasoning on the substantive constitutional issue is more significant.
Justice Donatus Okorowo, delivering the lead judgment, held that voluntary associations are generally entitled to manage their internal affairs and that courts should not interfere except where an association acts contrary to its own constitution.
The court also rejected the argument that the restrictions imposed by the disputed provisions could be justified under Section 45(1) of the Constitution.
Section 45 allows certain restrictions on fundamental rights in defined circumstances, including measures reasonably justifiable in a democratic society.
The Court of Appeal found that the restrictions imposed by the impugned CAMA provisions did not meet that constitutional standard.
The court’s finding was unequivocal: the provisions infringed the rights protected by Sections 38 and 40 and were not reasonably justifiable within the meaning of Section 45(1). (Tribune Online)
That finding is important because it moves the case beyond a technical disagreement over the powers of the CAC.
The court was dealing with the relationship between administrative regulation and constitutional rights.
But the judgment does not abolish CAC regulation
This is where some early descriptions of the decision risk going too far.
The Court of Appeal did not declare the CAC powerless over incorporated trustees.
Nor did it hold that churches, charities, NGOs or other associations are beyond regulation.
The court specifically preserved the administrative and regulatory functions of the Administrative Proceedings Committee established under Section 851.
What it removed was the part of Section 851 that purported to allow the committee to exercise judicial power: Deciding justiciable disputes at first instance to the exclusion of the Federal High Court and imposing penalties in the manner of a court.
Those remaining functions, the court held, are subject to the supervisory jurisdiction of the Federal High Court.
The judgment is therefore not a declaration that incorporated trustees operate in a regulatory vacuum.
It is a decision about where regulatory authority ends and judicial authority begins.
The Section 851 problem
Section 851 established the Administrative Proceedings Committee within the CAC.
Under CAMA, the committee was designed to hear persons alleged to have violated the Act or its regulations, resolve disputes and grievances arising from implementation of CAMA, and impose administrative penalties.
The committee is made up principally of senior CAC officials, with representation from the Federal Ministry of Industry, Trade and Investment.
The arrangement was intended to provide an administrative mechanism for dealing with corporate regulatory disputes without requiring every matter to go immediately before a court.
That objective is not inherently unusual.
Modern regulatory systems routinely use administrative tribunals and committees to deal with technical disputes, compliance questions and sanctions.
The constitutional difficulty arises when such a body begins to exercise powers reserved to the judiciary.
The Court of Appeal has now drawn that line.
Section 851 survives, but not in a form that allows the Administrative Proceedings Committee to act as a substitute for the Federal High Court.
What happens to existing CAC proceedings?
This is one of the most immediate questions raised by the decision.
The judgment invalidates the specific provisions identified by the court. It does not automatically erase every regulatory action the CAC has taken against every incorporated trustee since CAMA 2020 came into force.
The legal effect of the judgment on individual past actions will depend on the facts of each case, the nature of the action taken, whether proceedings are concluded or pending, and any subsequent orders or appeals.
Organisations that have been subjected to regulatory action under the affected provisions may therefore need to examine the precise legal basis of what was done to them rather than assume that every past CAC decision has automatically disappeared.
The same caution applies to pending disputes.
A court decision declaring legislation unconstitutional can have broad consequences, but the practical effect on completed administrative acts can involve questions of finality, accrued rights, procedural posture and further litigation.
Those issues are likely to surface if the decision is taken further.
The judgment also exposes a weakness in the regulatory design
There is a broader policy problem beneath the litigation. Incorporated trustees are not ordinary companies.
They include organisations formed for religious, educational, literary, scientific, social, cultural, sporting and charitable purposes. CAMA itself recognises this category separately from profit-making companies. Yet they can control substantial property and financial resources.
A large church may own schools, hospitals, universities, estates and investment assets. A charity can receive substantial donations. A professional or community association may control property and membership funds.
Accountability is therefore not a peripheral concern.
The state has a legitimate interest in preventing fraud, protecting beneficiaries, safeguarding property and ensuring that organisations comply with the law.
The judgment does not remove that interest.
It insists that the means used to pursue it must remain within the Constitution.
That may require a more carefully designed regulatory framework rather than simply less regulation.
The United Kingdom model offers part of the backstory
The controversial provisions did not emerge in a vacuum.
Legal analysis published after the Federal High Court judgment noted that some of the CAMA reforms concerning incorporated trustees drew from regulatory approaches in other jurisdictions, including the United Kingdom’s charities framework.
But importing a regulatory idea is never simply a matter of copying statutory language.
Nigeria has its own constitutional structure.
Section 38 protects freedom of thought, conscience and religion.
Section 40 protects the right to assemble freely and associate with others.
Section 251(1)(e) gives the Federal High Court jurisdiction in specified matters relating to companies and other corporate bodies.
And Sections 4(8) and 6 protect the separation between legislative, executive and judicial functions.
The Court of Appeal’s decision is therefore a reminder that a regulatory mechanism must fit the constitutional system into which it is introduced.
The unanswered problem: Accountability without government control
This is where the CAMA debate becomes more complicated than the familiar church-versus-government narrative.
There are two principles that have to coexist.
Religious and other voluntary organisations cannot claim constitutional freedom as a shield against fraud, financial abuse or unlawful conduct.
Government agencies cannot invoke public interest as a licence to take over the leadership or internal administration of private associations without constitutional authority and appropriate judicial safeguards.
The challenge is to build a system in which both propositions remain true.
The Court of Appeal has now rejected the particular statutory mechanism Parliament created in Sections 839 and 842 to 848. That leaves lawmakers with a choice.
They can appeal and ask the Supreme Court to reconsider the constitutional questions. They can amend CAMA. Or they can leave the existing legal framework to operate within the limits now established by the appellate court.
Whatever happens next, the case has exposed a gap that cannot be solved by slogans about either religious freedom or regulatory power.
Nigeria needs incorporated trustees to be accountable. It also needs the state to respect the constitutional space in which those organisations operate.
And there is a Supreme Court question
The Court of Appeal is not the final court in Nigeria. The CAC can still pursue an appeal to the Supreme Court, where the constitutional questions raised by the case could receive a final determination.
That possibility gives the ruling a significance beyond the immediate parties.
A Supreme Court decision would have the potential to settle the legal position nationally and provide clearer guidance on the permissible extent of administrative regulation of incorporated trustees.
Until then, the Court of Appeal’s decision stands as a substantial restriction on the particular powers challenged in Ekpenyong’s case.
The dispute that began with one lawyer challenging CAMA has therefore produced something much larger than a victory for one religious association or a setback for one government agency.
It has forced Nigeria’s courts to confront a difficult boundary: How far can the state go in regulating an association before regulation begins to interfere with the freedom that allows the association to exist in the first place?
The Court of Appeal has now supplied an answer for the provisions before it.
The next test will be whether Parliament and the CAC can construct a regulatory regime that protects the public without crossing the constitutional line the court has drawn.
