THE EVOLUTION OF COMPANY SEALS UNDER NIGERIAN LAW: A REVIEW OF CAMA 2020
By Oluwafemi Ilori Esq
Understanding the Company Seal A company seal, often referred to as a common seal, is a stamped or engraved impression used by a company to authenticate documents.[2] Section 98 of CAMA 2020 states that a company with a common seal must have its name engraved in legible characters. The seal serves as a formal indication that the company has approved the execution of a document. Under CAMA 1990, very company was required to have a common seal, and its use was governed by the company’s Articles of Association.[3] Documents executed by the company is duly signed if it bears the company’s seal.[4] The affixing of a seal was necessary for executing contracts, deeds, and other official documents. However, in practice, documents could also be executed by an authorized representative signing on behalf of the company.
Judicial Precedents on the Use of Company Seals The courts have long addressed the question of whether the absence of a company seal invalidates a document. In Omiyale v. Wema Bank Plc (2017) 13 NWLR (Pt. 1582) 300,[5] the appellants argued that a deed of debenture was illegal and ultra vires because it lacked the company’s seal. The court held that if a document is signed by the alter ego of the company,[6] the absence of a seal does not render it invalid. The purpose of a seal, the court reasoned, is to ensure that the proper representative executed the document.
Similarly, in S.P.D.C. (Nig.) Ltd. v. Allaputa (2005) 9 NWLR (Pt. 931) 475,[7] the Supreme Court reaffirmed that a document does not necessarily require a seal to be valid, provided it has been executed by an authorized officer of the company. The Court of Appeal stated as follows: stated as follows:
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? I shall answer that question ANON. Meanwhile I hereunder reproduce the provisions of section 77 of CAMA, 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 no
be under its common seal unless otherwise so required in this Part of Act.”
It has been said that the accredited representatives of the appellant – its Director and Manager – signed exhibit A and (here has not been anything to the contrary. Indeed the appellant asserted that it signed exhibit A. The presumption is that those authorised by it signed exhibit A. Let it be said that strong presumption avails in law, the maxim is praesumptio violenta valet in lege.
The Innovation in CAMA 2020
CAMA 2020 introduced a significant shift in corporate practice by eliminating the mandatory requirement for a company seal. Section 98 explicitly states that a company may choose to have a common seal, but it is no longer compulsory. More importantly, Section 103 provides clarity on instances where another law mandates the use of a company seal. It states that where any law requires a document to be executed under seal, that requirement is deemed satisfied if the document is signed in accordance with Sections 101 and 102 of CAMA 2020.
Section 101 outlines the proper execution methods for documents:
- A document requiring authentication may be signed by a director, secretary, or any other authorized officer.
- A document described as a deed may be executed by:
- A director and the company secretary,
- At least two directors, or
- A director in the presence of a witness who attests the signature.
Section 102 further reinforces this provision, making it clear that such execution methods are legally binding and equivalent to sealing a document.
Key Changes Introduced in CAMA 2020
- Abolition of Mandatory Common Seal – Unlike CAMA 1990, which required companies to affix a common seal to execute deeds, CAMA 2020 allows companies to execute deeds without a seal as long as they comply with the prescribed execution methods.
- Alternative Execution Methods – The new provisions in Section 102 provide for alternative methods of execution, including signatures by two directors or a director and a Secretary.
- Legal Equivalence – Section 103 states that a document signed following the execution methods in section 101 and 102 CAMA 2020 has the same legal effect as a document executed under seal.
Implications of CAMA 2020 on Corporate Practice: The removal of the mandatory company seal requirement eliminates uncertainty and removes unnecessary procedural formalities. Businesses now have greater flexibility in executing contracts and deeds, reducing the risk of technical invalidity due to the absence of a seal. Additionally, the new provisions ensure that where another law still mandates the use of a seal, compliance can be achieved through authorized signatures instead.
Conclusion Prior to the enactment of CAMA 2020, Nigerian courts had already established that a document signed by a company’s authorized representative remains valid even without a common seal however it still alluded that it might can be invalidated if another Act specifically requires a company seal. However, Section 98 removes the mandatory requirement of a company having a common seal and Section 103 of CAMA 2020 further solidifies this principle by ensuring that even where another law requires a seal, compliance is still met if the document is signed in accordance with Sections 101 and 102. This innovation is arguably the most significant change concerning company seals, as it aligns legal requirements with modern corporate practices and eliminates unnecessary administrative burdens or technicalities. In essence, CAMA 2020 confirms what judicial decisions had already established: a company’s legal commitments are upheld not by the presence of a seal, but by the proper authorization of its representatives.
[1] Companies and Allied Matters Act (CAMA) 2020
[2] https://uk.practicallaw.thomsonreuters.com/6-519 1869?transitionType=Default&contextData=(sc.Default)&firstPage=true
[3] Section
[4] Section 69(d) CAMA 1990
[5] Omiyale v. Wema Bank Plc (2017) 13 NWLR (Pt. 1582) 300
[6] Section 77 CAMA 1990
[7] S.P.D.C. (Nig.) Ltd. v. Allaputa (2005) 9 NWLR (Pt. 931) 475 p 514 p f