Yalaju-Amaye v Associated Registered Engineering Co. Ltd (1990) 4 NWLR (Pt 145) 422 (SC)

Case Title and Citation

Yalaju-Amaye v Associated Registered Engineering Co. Ltd (1990) 4 NWLR (Pt 145) 422 (SC)

Court Name and Bench

Court: Supreme Court of Nigeria

Coram: Nnaemeka-Agu JSC (delivering the lead judgment), Obaseki, Craig, Wali and

Nnamani JJSC concurring.

Bench Type: Five-member panel of the Supreme Court.

Date of Judgment

23 March 1990

Parties Involved

Appellant: Chief M. O. Yalaju-Amaye, a founding member, shareholder, and Managing Director of Associated Registered Engineering Company Limited (AREC). Respondent: Associated Registered Engineering Company Limited, a Nigerian engineering company incorporated under the Companies Act.

Facts of the Case

Chief Yalaju-Amaye was one of the founding members of AREC Ltd and served as its first Managing Director under the company’s Articles of Association. The Articles stipulated that
directors could be appointed or removed in accordance with the company’s constitution and the provisions of the Companies Act. With time, serious disagreements arose among the directors over the management of the company. At one of the board meetings, certain directors purported to remove Yalaju- Amaye from his position as Managing Director and to appoint another person in his stead. The appellant maintained that the meeting was irregularly convened, that he received no notice of the alleged resolution, and that the removal breached both the Articles of Association and his personal contract of employment. He therefore approached the High Court of Lagos State seeking a declaration that his removal was null and void, an injunction restraining the company from preventing him from acting as Managing Director, and damages for breach of contract. The High Court found in his favour and declared the removal invalid. The Court of Appeal reversed that decision, holding that the board had validly exercised its powers. Dissatisfied, the appellant further appealed to the Supreme Court.

Issues Raised

1. Whether the respondent company validly removed the appellant as Managing Director in
accordance with its Articles of Association and the Companies Act.

2. Whether the failure to give notice of the board meeting and to follow due procedure
rendered the removal invalid.

3. Whether the appellant was entitled to damages for breach of his service contract.

4. Whether the actions of the board, though irregular, could still bind the company.

Arguments of the Parties

Appellant’s Submissions

Counsel for the appellant argued that the board meeting at which his removal was decided was invalid because proper notice was not given to him as required by the Articles of Association. He contended that the power to remove a Managing Director lay with the general meeting of shareholders and not solely with the board. The appellant further
submitted that his contract of service remained binding and that his removal without notice or hearing amounted to a breach of both the contract and the Articles. He urged the Court to uphold the principle that corporate powers must be exercised in good faith and in accordance with law.

Respondent’s Submissions

The respondent company maintained that its board of directors was duly empowered by the Articles to remove any officer of the company, including the Managing Director. It argued that since the company acts through its board, the decision represented the company’s valid act. Even if there were defects in procedure, the respondent submitted that such irregularities did not nullify the decision because the substance of the matterjustified removal. The respondent also argued that reinstatement was not an appropriate remedy since the relationship between the parties had broken down irretrievably.

Judgment and Final Decision

The Supreme Court allowed the appeal in part. It held that the appellant’s removal wasprocedurally defective and therefore invalid. The Court found that under the Articles of Association, the removal of a Managing Directorrequired proper notice, quorum, and compliance with the company’s internal regulations. The failure to observe these requirements rendered the decision of the board void.

Although the company possessed the power to remove a Managing Director, that power had to be exercised in good faith and in accordance with due process. Consequently, the appellant’s dismissal was declared invalid. However, since the contract of employment was one of personal service, the Court declined to order reinstatement. Instead, it awarded damages for wrongful termination.

Legal Reasoning / Ratio Decidendi

The Court reaffirmed that a company is a separate legal entity which acts only through itsorgans—the board of directors and the general meeting. Nevertheless, the exercise of
corporate powers must conform strictly to the Articles of Association and the relevant provisions of the Companies Act. Justice Nnaemeka-Agu observed that even though directors may have wide managerial powers, they are bound by the procedural safeguards in the Articles. Any act done in breach of those provisions is not only irregular but void. The Court reasoned that the concept of corporate personality does not confer immunity from compliance with due process.

The Court also stressed that the relationship between a company and its Managing Director has a dual nature: it is both contractual and fiduciary. When a company disregards
its internal rules or acts in bad faith to remove a director, it breaches both duties. The remedy lies in damages rather than reinstatement because courts generally refrain from compelling personal service contracts. The decision underlined the need for fairness, accountability, and transparency in corporate administration. It balanced the autonomy of a company’s board with the rights of individual directors, ensuring that internal governance remains consistent with the principles of justice and equity.

Conclusion / Observations

The decision in Yalaju-Amaye v Associated Registered Engineering Co. Ltd remains one of Nigeria’s most important authorities on company management and director removal. The Supreme Court made it clear that even though a company has the power to remove its directors, such power must be exercised within the limits of its Articles of Association and the law.

The case has become a touchstone for good corporate governance in Nigeria. It ensures that managerial changes within companies are conducted transparently and that directors are protected from arbitrary removal. The judgment also reinforces the idea that fairness and due process are essential elements of business law. In the broader context of Nigerian corporate practice, the case guides companies to adhere strictly to procedural rules when making management decisions. It remains relevant today under the Companies and Allied Matters Act 2020, particularly regarding sections 288–292 which deal with the removal of directors.

Personal Reflection:

The case illustrates that law and business are not separate realms but complementary systems. It demonstrates how the observance of procedure and good faith preserves trust in corporate relations. For a student of business law, it shows that fairness and legality are the foundations of every enduring company.

Reference(S):

1. Yalaju-Amaye v Associated Registered Engineering Co Ltd (1990) 4 NWLR (Pt 145) 422
(SC).

2. Salomon v Salomon & Co Ltd (1897) AC 22 (HL).

3. Okwejiminor v Gbakeji (2008) 5 NWLR (Pt 1079) 172 (SC).

4. Companies and Allied Matters Act 2020 (CAMA 2020).

5. A Yakubu, Corporate Law in Nigeria (Malthouse Press 2021).

6. E Okonkwo, Cases and Materials on Nigerian Company Law (University of Lagos Press
2020).