RULING
The Applicant an investor in the 1st Respondent’s private placement commenced this suit via an Originating Application dated 28th January 2013 and filed on the 8th February 2013 against the Respondents. The 1st Respondent is a company duly registered as a private company under the Companies and Allied Matters Act, Cap C20 Laws of the Federation 2004. The 2ndRespondent is the Managing Director of the 1st Respondent while the 3rd Respondent is the regulatory authority for matters of securities.

The Applicant further filed an Amended Statement of Claim on 20th May 2013 wherein she claimed against the Respondents as follows; the sum of N14, 000, 000. 00 (Fourteen Million Naira only) against the 1st Respondent being the total amount for the shares which the Applicant paid for; the sum of N14, 000, ooo.00 (Fourteen Million Naira Only) against the 2nd Respondent for damages for deceiving the Applicant and N14, 000, 000. 00 (Fourteen Million Naira Only) against the 3rd Respondent for negligence in aiding the 1st and 2nd Respondents to swindle the Applicant.

By a notice of Preliminary Objection dated and filed on March 4, 2013, the 1st and 2nd Respondents are challenging the competence of this suit as well as the jurisdiction of this Honourable Tribunal to hear and determine the Applicant’s case.

However, the 3rd Respondent did not enter appearance and consequently did not join issues in the matter.

They are therefore urging for a striking out of the suit or the name of the 2nd Respondent or a dismissal of this suit.

The 1st and 2nd Respondents preliminary objection is predicated on the following grounds;

  1. The suit as constituted against the 1st and 2nd Respondents is not cognizable under section 284 (1) of the Investments and Securities Act 2007.
  2. There has not been a decision or determination by the Securities and Exchange Commission in respect of the complaint of the Applicant as to confer on the Honourable Tribunal the jurisdiction to adjudicate on the Applicant’s suit.
  3. There is no claim against the 2nd Respondent and consequently the 2nd Respondent is not a necessary party and the suit does not disclose any reasonable cause of action against the 2nd Respondent.

The application is accompanied by an 8 paragraphs affidavit in support deposed to by Mr. Ishmael Ebhodaghe, counsel in the 1st Respondent’s law office on March 3, 2013. The application is further accompanied by a written address dated March 4, 2013 wherein counsel for the 1st and 2nd Respondents has formulated the following issues for determination:
(i.) Whether the suit as constituted is cognizable under section 284 (1) of the Investments and Securities Act 2007 as to confer jurisdiction on the Honourable Tribunal
(ii.) Whether there being no claim against the 2nd Respondent, the 2nd Respondent is a necessary party against whom a reasonable cause of action has been disclosed.
Applicant in her reply to the 1st and 2nd Respondent’s preliminary objection filed a counter affidavit deposed to by Chikodi Felix Okeke of counsel to the Applicant on May 17, 2013. The counter affidavit is accompanied by a written address dated May 17, 2013, wherein the Applicant raised the following issues for determination:

  1. Whether this Honourable Tribunal has jurisdiction to hear and determine this suit.
  2. Whether there is a reasonable cause of action against the 2nd Respondent.
  3. Whether there has been a decision or determination by the Securities and Exchange Commission in respect of the complaint of the Applicant as to confer on the Honourable Tribunal the jurisdiction to adjudicate on the applicant’s suit.

At the last adjourned date of this matter on May 21, 2013 the Applicant moved for and was granted an amendment of the Originating application and a further witness statement on oath, with the resultant effect that counsel to the 1st and 2nd Respondents withdrew their 3rd ground of objection as well as the prayed order for a striking out of the name of the 2nd Respondent.

Counsel for the parties also adopted their respective written briefs. We have dutifully gone through the arguments of parties and are persuaded that this instant application turns upon the determination of:

Whether this Honourable Tribunal can be properly seized of the jurisdiction to hear and determine this suit.

Jurisdiction is a threshold issue and when raised must be determined before enquiring into the substance of a case. A court is only clothed with jurisdiction if the condition precedent to the institution of an action is met. See Erhunmunse Vs. Ehanire (1998) 10 NWLR Part 568, page 53 @ 61, paragraphs G-H where the court held that a court will be competent if;

(a) it is properly constituted with respect to the number and qualification of its members;

(b) the subject matter of the action is within its jurisdiction;

(c) the action is initiated by due process of law; and

(d) Any condition precedent to the exercise of its jurisdiction has been fulfilled; see also Madukolum V. Nkemdilim (1962) SCNLR 341 or (1962) ALL NLR 581@ 582 – 590

In proffering their argument on jurisdiction counsel for the 1st and 2nd Respondents posited that the Applicant’s case is not cognizable under section 284(1) of the Investments and Securities Act 2007. He submitted that no decision or determination of the 3rd Respondent was ever made as required by law and that neither the 1st nor 2nd Respondent is within the purview of persons nor entities who could be sued pursuant to the jurisdiction of the Tribunal as provided for in section 284 (1) ISA 2007.

In their submission Applicant’s counsel argued that the relationship between the Applicant and the 1st Respondent falls within section 284 (1)(ii) of the Investments and Securities Act 2007 to wit; disputes “between Capital Market Operators and their Client”.

Whilst it is not in doubt that the 1st Respondent is a Capital Market Operator, the Applicant is certainly not its client but an investor, and for the purposes of the transactions giving rise to this action vis – a-viz the relationship between the 1st Respondent and the Applicant, the 1st Respondent could properly be described as an issuer of securities.

Accordingly when it is considered that the Securities and Exchange Commission is a party in this suit for whom the Applicant has made out a claim against, in her amended Originating Application this matter could be seen as a dispute between an Investor and the Commission. See section 284 (1) (d) ISA 2007.

However it must be firstly determined whether or not the Applicant is an investor as is contemplated in the ISA 2007.
Whilst we have noted that the word investor is not defined in the ISA 2007, it is our considered view that it cannot go beyond persons who invested in such securities and investments recognized by the ISA 2007, to wit; investments in securities of public companies and securities or investments of a collective investment scheme. See section 54 ISA 2007. No doubt the Applicant’s investment is not one of such, thus this instant case cannot properly be located under section 284 (1) (d) ISA 2007.

Rather careful perusals of the Applicant’s claim readily show that her cause of action is founded on a private placement of a limited liability company. A private placement is cognizable under the Investments and Securities Act (ISA) 2007, only to the extent that it relates to the private placement of a Public Company, in which case it will be subject to the Rules and Regulations of the Securities and Exchange Commission. See Rule 89 (1) Securities and Exchange Rules and Regulation

We have no reason to believe that the 1st Respondent’s private placement in question was overseen or regulated by the 3rd Respondent Commission. The regulatory oversight of the 3rd Respondent can only be invoked with regards to the regulation and supervision of the registration and sales of securities offered for private placement by a public company. See sections 89 and 106 of the Securities and Exchange Commission Rules and Regulations

Moreover, the Applicant in paragraph 3 of its Originating Application stated as follows:

The 1st Respondent is a company duly registered under the Companies and Allied Matters Act, Cap C20 Laws of the Federation 2004 (CAMA) as a private company limited by shares with registration number 223042 (underlining ours).

It is thus not in doubt that the Applicant participated in the private placement of the 1st Respondent with the full knowledge that it was dealing in the private placement of a private company. The alleged assurances obtained from the 2nd Respondent that the 1st Respondent was a quoted company and that the shares to be bought will be freely transferable notwithstanding.

The submission of the 1st and 2nd Respondents that no decision or determination of the 3rd Respondent was ever made as required by law to our mind is of no moment and amounts to a mere academic argument in view of our findings above. This argument would only have been necessary for consideration if we had found that this action is well founded under section 284 ISA 2007.

Having carefully considered this Originating Application it is our considered view that this Tribunal lacks the jurisdictional competence to enquire into matters arising therefrom.

Accordingly this matter is hereby struck out in its entirety.
Dated this May 31st, 2013
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Dr. Ngozi Chianakwalam
Honourable Chairman