An Appraisal Of The Liabilities Of A Company For The Acts Of It’s Directors

Project and Seminar Material for Law

An Appraisal Of The Liabilities Of A Company For The Acts Of It’s Directors


A company can be described as a legal entity or a body corporate, having perpetual succession and also a common seal, as well as the ability to sue and be sued in its own corporate name. Suffice to state, also that the company upon its incorporation can acquire property in its corporation name. This corporate personality, gives the company the status of a person; albeit artificial, having all the qualities of a normal human being.

It should be noted, that a company is by virtue of the celebrated case of Salomon V. Salomon & Co. (1897) A.C. 22, an entity separate from its members having the capacity to own assets, properties, liabilities, right and obligations incidental to the activities of the company done, giving it responsibilities for all its acts and not its members and/or officers.

The effect of this, is that the members or officers of the company are not in any way under any form of liability for acts done in course of discharging their duties but the company (a legal person) bears all such liability; even though its activities are carried out by human beings whose acts are of paramount importance to the company.

At this juncture, it would not be out of place to state with particular reference to this project work that the acts of directors as officers of the company are also accruable to the company. Be that as it may; the meaning and nature of a director is without a universally acceptable definition, neither could it lend itself an easy definition and a much easier understanding. However, directors can be defined as managers of the company. They are not employed by the company and as such cannot be said to be employees of the company, servants or members there to but they can be seen as officers of the company, for the purpose inter alia of making the company vicariously liable for their acts and omissions while engaged in the business of the company.

In essence, this project work has as its sole aim; the consideration of the liabilities of a company for the acts of its agents, with particular reference and emphasis on the director of a company and it shall also consider, the position of the law, as it relates to the above issue of liability of a director with reference to a company.

Chapter Five

General Conclusion

5.0.0: Conclusion

The principle of corporate personality, though fundamental in company law was never meant to be sacrosanct to the extent that it could be used to protect crime, fraud or unethical commercial practice.

However, the corporate structure lends itself easily to numerous fraudulent dimensions; it permits criminals to operate behind a veil of anonymity, it also fosters notions of respectability based on a cooperate image which may have been carefully contrived by dishonest insiders. The challenge posed to the law by persons who deliberately use the corporate personality concept for dishonest or criminal motives are formidable.

This is not to say however, that in every case where a company is involved in crime, the agents and officers are responsible. The advantage of incorporations has been put to dubious use by insiders to the disadvantage of the company.

However, in recent times officers and agents of a company for whose act the company will be held liable are equally held liable with the company as principal offenders139

Corporate liability ensures that the offence committed either by agents or officers while acting in their capacity as such will not go unpunished and the fine proportionate to the gravity of the offence.

Thus, the imposition of liability on the company gives all those acting as the „brains‟ and directing mind of the company an interest in the prevention of illegalities and they are in position to prevent them.

Moreover, it will make them be on their guard since such convictions of the company can give them a „bad‟ image in public.

5.1.0: Recommendation

An attempt has been made to examine the officers and agents of a company: their appointment, duties, remuneration, removal and liabilities under the Company Allied Matters Act 2004.The Act even though has made for the protection of the officers also gave room for instances where these right can be boycotted that is, lifting the veil of incorporation.

Be that as it may, there is the need for companies in Nigeria to employ committed officers and agents who seek to uphold the course of the company at all times and not people who run after their own selfish interest or means of defrauding the company.

The area of the law in Nigeria need further development as to curb the rate at which fraud is being perpetrated by the officers and agents of the company who hide under the principle of corporate personality to defraud the company. Therefore, a more stringent method of appointment of officers and agents should be employed.

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