LEAVE TO SUE A COMPANY IN LIQUIDATION UNDER SECTION 580 OF COMPANIES AND ALLIED MATTERS ACT 2020: IMPERATIVE FOR LEGISLATIVE INTERVENTION

Abstract

The Companies and Allied Matters Act, (CAMA), 2020, is the foundational Legal framework, for the regulation and management of incorporated Companies in Nigeria. The lifespan of a company incorporated under CAMA, 2020, and the relevant legislations outside Nigeria, can be brought to an end through a procedure known as ‘Winding-upâ€. Winding-up involves two distinct stages, the liquidation and dissolution stage. At the liquidation stage, the company is still a going concern and still retains its legal personality until it is finally dissolved. Liquidation is the winding up of a company. It is a legal process that applies to companies or partnerships in which a liquidator is appointed to "wind up" the affairs of a company. In other words, the corporate life of the company is brought to an end and the company ceases to exist. The purpose of liquidation is to ensure that all the company's affairs have been dealt with and all its assets realized. The company winding up may be effected by the court or by the shareholders (voluntary); or voluntarily subject to the supervision of the court. Hence, Section 580 of CAMA, 2020, provides that “If a winding-up order is made or a provisional liquidator is appointed, no action or proceeding shall be proceeded or commenced against the company except by leave of the Court given in such terms as the Court may imposeâ€. Thus a company in liquidation can sue and maintain an action in court but no action can be brought against it, except with leave of court. This is however, unjust, and imperative for Legislative Intervention . This article aims to explore the provision of Section 580 of CAMA, 2020. The article also concludes by saying that the purport of section 580 of CAMA, 2020 is unjust, unfairly prejudicial and requires an urgent legislative action. The article therefore recommends that there is an urgent need for an amendment of the said section 580, to eliminate further injustice.