This article critically reviews the Nigerian Supreme Court’s decision in Longe v. First Bank of Nigeria PLC. It argues that the failure of the Court to meticulously consider the effects of suspension on a director who is also an employee of his company and to distinguish between executive and non-executive director led the Court to a wrong decision in the case. It argues that the decision of the Court unsettles established and settled principles of corporate and labour law and, therefore, calls on the Court to review its decision at the earliest opportunity.
In a way, the case of Bernard Longe v First Bank of Nigeria Plc is both significant and sensational. Parties to the case might have since forgotten it, but its echo still resonates with emotions in legal and academic circles. Why? On 10 March 2010, the Supreme Court of Nigeria delivered judgment in the case on appeal, which was stupefying and bewildering because, like ‘a bull in a china shop’, it unsettled settled principles of corporate governance and that of the law of employment.
But some scholars hailed the judgment because they believed it was ‘the first time in the history of labour law in Nigeria that the apex court held that an employee in a private employment could be reinstated.’ However, the issue of reinstatement is not the focus of this discussion. This review primarily argues, among other issues, that the Supreme Court failed to adequately and effectively
consider the implication of suspension of a director who is an employee of his company. The Court also failed to appreciate the different categories of directors and the legal status that each category has in the company.
This discussion is structured as follows. After the introduction, it briefly summarizes the facts of the case of Longe v First Bank of Nigeria. It then examines the different categories and duties of directors. This laid the foundation for the discussion of the next section that evaluates the nature and effect of suspension for the duties of a director. The article then raises a query as to who won Longe’s
case. The article submits that three principal parties were involved in the case: Bernard Longe, the Bank and the Supreme Court, but they all lost the case. The review concludes that the decision of the Supreme Court that a suspended director was still entitled to a notice of meeting to attend board meetings was made in error. Therefore, the decision does not deserve to be a good precedent and should not be followed. Since the Supreme Court’s decision in the case was based on the provisions of the Companies and Allied Matters Act 1990 (the Companies Act), references in this review are also made to the same. However, equivalent provisions of the Companies and Allied Matters Act
2020 (CAMA2020) are provided in the footnotes to make it relevant to contemporary readers
The facts of Longe’s Case
The facts of the case are straightforward. Bernard Longe was initially employed as an executive director of First Bank of Nigeria Ltd. By virtue of that office, every director — elected or employed — is ‘entitled to receive a notice and attend the directors’ meeting unless any reason under the Act disqualifies him from continuing with the office of director’.
Bernard Longe had been attending the directors’ meeting since he was an ordinary executive director. His subsequent appointment as managing director did not add any further right under section 266(1) of the Companies Act. After all, “a managing director is a director with added
responsibilities.” Along the line, the Appellant did some transactions quite unfavourable to the Bank and resulted in a colossal financial loss to the company. He was queried and interviewed and was given a specific time to take remedial measures and report back to the board of directors. No report was given. Faced with that fait accompli, the board suspended Longe from work; and called a board meeting to consider how to recoup the considerable loss it had suffered. Longe was not sent notice of the meeting. He was aggrieved for not receiving the board meeting notice as provided by section 266(1) of the Companies Act.
Consequently, Longe brought an action against the Bank on the grounds that: (i) he was entitled to be given notice of the meeting involving his appointment, and (ii) as he was not given notice of the meeting, the meeting was invalid and accordingly all decisions taken at that meeting were unlawful, null and void and in particular the decision to revoke his appointment. The First Bank argued that due to Longe’s suspension by the board, he was not entitled to further notice of the meeting at which his appointment was revoked.
The main and the only issue before the High Court was whether, by reason of his suspension, the Appellant was “disqualified by any reason under the Act from continuing with the office of director.” The board believed he was disqualified as a result of his suspension. The Federal High Court and the Court of Appeal both dismissed Longe’s claims, and Longe then appealed to the Supreme Court.
The Supreme Court overturned the decisions of the lower courts. It issued a declaration that the board of directors of the Bank could not lawfully hold a board meeting without giving notice to Longe and that all decisions taken at any such meeting were unlawful, null and void and incapable of having any legal effect. In effect, the Bank’s decision to sack Longe, which was made at the meeting of the board of the Bank held in his absence, was illegal, null and void as it did not follow the due process under sections 266(1) and (2) of the Companies Act. The Court’s decision was predicated on the ground that since Longe was not dismissed but was only suspended, he was entitled to attend the board meeting. The Court did not also appear to recognize any difference between executive and non-executive directors. However, the issue of Longe’s suspension was tangentially relevant to the issue of whether Longe was “entitled to receive notice of the directors’
meeting.”
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