In Nigeria, the commercial space has over time been polluted by the nefarious activities of many acclaimed “Investment Companies” promising huge return on investment on a monthly basis. The modus operandi of these companies is to call on the public to invest monies with them under the guise of trading in a profitable venture with promises of robust Return of Investment (ROI) periodically, most times it is always on a monthly basis. To wear a “Legal Facade” to this mushy transaction, the companies execute agreements with their numerous clients. These agreements are nomenclature differently depending on the issuing company, it is mostly termed Memorandum of Understanding, Investment/Business Agreement etc.
However, the Court of Appeal in the case of Mr. Noah Ochendi & Ors V. CBN & Ors (2018) LCN/11930 affirmed the decision of the lower court by dismissing the Appeal on the ground that the court does not have the jurisdiction to enforce an illegal contract.
The appellant in this case are group of investors who invested with Wealth Zone Limited, they collected their capital and interest for sometimes until the company had some regulatory and compliance matters with the Security and Exchange Commission that declared the activities of Wealth Zone Limited as an Illegal Wonder Bank/Fund Manager operating in Nigeria and their accounts were frozen. The freezing of the account made it impossible for the company to make payments and fulfil their obligations under the investment agreement. Aggrieved investors approached the High Court to enforce their rights under the investment agreement and also seek the intervention of the court to ensure that Wealth Zone Limited pays back their investment capital.
The High Court in giving its judgement stated that it lacks the jurisdiction to enforce an illegal contract. The court stated that Wealth Zone Limited is not licensed to carry on the business to which the claimants invested their money in hence, the said transaction is void ab initio. The High Court stressed that the activities of Wealth Zone Limited runs foul of the provisions of Sections 58 and Section 59 of the Bank and Other Financial Act (BOFIA) that provides mandatorily that unless a company is duly incorporated in Nigeria and obtains all other valid licenses, it lacks the authority and capacity to collect money from the public for the purpose of investment or expansively, carry-on financial business in Nigeria.
Dissatisfied with the decision of the High Court, the claimants now Appellants, approached the Court of Appeal to set aside the decision of the High Court and also enforce their rights under the Investment Agreement. The court wholistically considered the decision of the lower court and the provisions of Bank and Other Financial Act (BOFIA) and affirmed the decision of the lower court stating that the monies the Appellants seeks to recover are in respect of transactions i.e financial business of soliciting for and accepting money from the general public as deposits for profit, by a company that did not have a valid license on such business prohibited by the provision of BOFIA and so illegal. The apex court cited the maxim of Extup causa Oritur non actio which means, “out of and illegal cause, no action can arise.
CONCLUSION
From this write up, the attitude of the civil court can be gleaned with respect to investment with unlicensed companies. Any document executed and signed evidencing the transaction, rights and obligations with an unlicensed company is void.
It is therefore advisable that before you venture into any contract with any investment company or commit your finances, you seek the services of a Legal Practitioner to help you do the necessary due diligence so as to validate the status of the company and tell if truly the company has the requisite license to transact in the business of investment as represented.
