The Supreme Court of Appeal made important findings regarding the powers of the Companies Commission to investigate a complaint.
- Where the complaint relates to the inaccuracy of the company records as to who was a director, the failure to ensure that the record was maintained accurately constitutes either an ongoing act or omission under section 219(1)(a) of the Companies Act and the right to investigate does not stop after three years.
- Secondly, the fact that there is litigation pending in regard to the question whether the director had resigned does not bar the CIPC from investigating the matter because there was no prejudice to the company if it does so.
- Thirdly, the dispute regarding the accuracy of the company records fell within the jurisdiction of the Commission to investigate a complaint and ensure the proper administration of the Act and compliance with the principles of good corporate governance.
The three year time bar under section 219(1) for a CIPC investigation did not apply because the obligation of the Commission to ensure that company registers are maintained accurately is not frozen in time. If the records of the company reflect inaccurate information, there is an ongoing obligation on the officers of the company to ensure that the inaccuracy is cured.
When a party is required to appear in two different forums, each of which has jurisdiction in respect of the subject-matter, the manner in which that party deals with the process in each forum is a matter of choice. Here there was no prejudice arising from the CIPC’s investigation prior to the civil case and the investigation could proceed.
One would expect that if there is an order of preference in relation to competing forums, the statutory regulator should enjoy preference. The share register is a document in which the world at large should have confidence. The CIPC must be empowered to fulfil its obligations to ensure accurate records of companies under its jurisdiction, in the public interest. Their powers to investigate a complaint concerning the accuracy of a company record must enjoy primacy over private litigation involving companies.