Corporate Personality And Liability In Nigeria: Emerging Dynamics In Corporate Law

Introduction

The doctrine of corporate personality, rooted in the seminal English case of Salomon v Salomon & Co Ltd,¹ is a cornerstone of company law. Upon incorporation, a company becomes a legal entity distinct from its members, capable of owning property, entering contracts, suing and being sued.² This principle is codified in Nigerian law under the Companies and Allied Matters Act (CAMA) 2020.³ However, recent jurisprudence—particularly the transnational litigation involving Shell Plc and its Nigerian subsidiary—has tested the boundaries of this principle and reshaped the understanding of corporate liability in Nigeria. This article explores how the doctrine of corporate personality has been applied in Nigeria, what exceptions or challenges exist (including lifting or piercing the corporate veil), and how recent cases are redefining the boundaries of liability in corporate law.

Statutory and Judicial Basis of Corporate Personality in Nigeria

Section 42 of CAMA 2020 provides that upon incorporation, a company becomes a body corporate with perpetual succession and the power to sue and be sued in its corporate name. This statutory provision affirms the principle of separate legal personality.⁴

Nigerian courts have long upheld this doctrine. In Marina Nominees Ltd v FBIR,⁵ the Supreme Court confirmed that a company is distinct from its shareholders. Similarly, in Union Bank of Nigeria Ltd v Penny-Mart Ltd,⁶ the Court reiterated that the liabilities of a company are not automatically those of its members.

Limits: Lifting or Piercing the Corporate Veil

Despite its sanctity, the doctrine of corporate personality is not absolute. Courts may disregard separate legal identity in cases of fraud, illegality, or where the company serves as a façade. In Oboh & Anor v. Nigeria Football League Ltd & Ors⁷, the Court held that the veil may be pierced to prevent abuse of corporate structures. CAMA 2020 also envisages instances where directors and members may be personally liable, particularly in cases of fraudulent or reckless trading.⁸

The Shell Cases: Ogale, Bille and Okpabi Litigation

The persistent environmental challenges observed in the Ogale and Bille communities of Rivers State, Nigeria, exemplify the broader ecological and socio-economic issues affecting oil-producing areas within the Niger Delta region. Over several decades, community members have reported incidents of environmental pollution, degradation of livelihoods, and contamination of water resources associated with oil spills. The Shell Petroleum Development Company of Nigeria Ltd (SPDC)—formerly a subsidiary of Shell Plc (previously Royal Dutch Shell Plc), now acquired by Renaissance Africa Energy Company Ltd, remains the subject of ongoing legal proceedings concerning alleged environmental impacts arising from activities undertaken during the period of SPDC's ownership.

In June 2025, the UK High Court delivered a landmark decision in Ogale & Bille v Shell Plc and SPDC,⁹ deepening the debate on parent company liability and transnational corporate accountability. Justice May held that Shell Plc, the UK parent company, could be jointly liable with its former Nigerian subsidiary, SPDC, for long-standing oil pollution in the Niger Delta.¹⁰ The Court dismissed Shell's arguments that liability rested solely with SPDC and that the claims were statute-barred under Nigerian law, holding instead that ongoing pollution and failure to remediate created continuing causes of action.¹¹

This judgment builds on the UK Supreme Court's decision in Okpabi v Royal Dutch Shell Plc,¹² which recognised that a parent company may owe a duty of care where it exercises significant control or oversight over a subsidiary's operations. The High Court reaffirmed that Shell Plc's centralised environmental policies linked it directly to the harmful activities of SPDC in Ogale and Bille.

Implications for Nigerian Corporate Law

The Okpabi, Ogale and Bille cases collectively mark a pivotal moment in the evolution of corporate accountability for environmental harm. They demonstrate a judicial willingness to extend liability beyond national borders and to scrutinise the role of parent companies in the operations of their subsidiaries. The decisions not only reshape transnational tort litigation but also carry profound implications for Nigerian environmental and corporate law. In particular, the cases have the following implications:

1.  Expanded Parent Company Liability
   
   The rulings affirm that multinational parent companies may be held directly liable where they exercise significant operational control or policy oversight over their subsidiaries. The UK Supreme Court in Okpabi v Royal Dutch Shell Plc¹³ and the 2025 High Court decision recognised that such control can give rise to a direct duty of care owed to affected communities and individuals, thereby narrowing the protective scope of the doctrine of separate legal personality.¹⁴
   
   
2. Growth of Transnational Litigation
   
   The cases illustrate how Nigerian communities, faced with weak domestic enforcement mechanisms, increasingly turn to foreign courts for remedies. This trend highlights the growing internationalisation of corporate human rights litigation, where victims of environmental degradation can access justice beyond national borders.
   
   
3. Clarification of the Corporate Veil Doctrine
   
   By allowing claims against parent companies to proceed, the courts in these cases effectively refined the circumstances under which the corporate veil may be lifted. This development signals to Nigerian courts that in instances of environmental pollution, human rights abuses, and other deserving cases, strict adherence to corporate separateness may yield to considerations of justice and accountability.¹⁵
   
   
4. Need for Regulatory Reform
   
   These judgments underscore the necessity for Nigeria to strengthen and harmonise its regulatory frameworks, particularly under the Petroleum Industry Act 2021,¹⁶ the National Environmental Standards and Regulations Enforcement Agency (NESREA) Act 2007,¹⁷ and other environmental statutes. Aligning domestic laws with international standards on corporate liability and environmental protection would enhance local accountability and reduce reliance on foreign litigation.
   
   
5. Integration of ESG and Human Rights Standards
   
   The Shell cases reflect the growing convergence of Environmental, Social, and Governance (ESG) principles with corporate law.¹⁸ They encourage multinational and local corporations alike to adopt sustainable practices, conduct due diligence on environmental impacts, and integrate human rights considerations into their corporate governance frameworks.¹⁹

Recommendations

In view of the emerging trends in corporate liability and the evolving jurisprudence exemplified by the Okpabi, Ogale, and Bille cases, the following recommendations are proposed to enhance corporate accountability and strengthen Nigeria's legal framework on corporate personality:

1. Legislative and Policy Reform on Parent Company Liability and Corporate Accountability
   
   Nigerian company law should be reformed to clearly define the circumstances under which a parent company may be held directly or jointly liable for the acts of its subsidiaries, particularly where it exercises substantial control or policy direction.²⁰ This reform should draw from comparative jurisprudence such as Okpabi v Royal Dutch Shell Plc²¹which recognised parent company duties of care in transnational contexts. Incorporating such principles into the Companies and Allied Matters Act 2020 and sectoral legislation like the Petroleum Industry Act 2021 would align Nigeria with international best practices and close accountability gaps.²²
   
   
2. Strengthening Environmental and Human Rights Governance through Mandatory Due Diligence
   
   Nigeria should introduce mandatory environmental and human rights due diligence requirements for corporations operating in high-risk sectors such as oil, gas, and mining. This can be achieved by amending the Nigerian Code of Corporate Governance 2018 and relevant environmental statutes to make Environmental, Social and Governance (ESG) compliance legally enforceable rather than voluntary.²³ Such a move would reflect the global shift toward corporate sustainability, as demonstrated in the European Union's Corporate Sustainability Due Diligence Directive.²⁴ It would also ensure that companies internalise human rights and environmental obligations within their corporate governance frameworks.²⁵=
   
   
3. Enhancing Domestic Enforcement and Access to Justice
   
   Nigerian regulatory agencies such as the National Environmental Standards and Regulations Enforcement Agency (NESREA) and the National Oil Spill Detection and Response Agency (NOSDRA) should be better funded, empowered, and coordinated to ensure prompt enforcement of environmental standards and remedies. Additionally, judicial and procedural reforms should broaden access to justice for affected communities, including relaxing the rules of locus standi and creating specialised environmental courts or tribunals to expedite environmental and corporate accountability cases. Strengthening domestic remedies would reduce reliance on foreign litigation and restore confidence in Nigeria's justice system.

Conclusion

The doctrine of corporate personality remains fundamental to Nigerian company law, but its contours are shifting. The Shell litigation exemplifies a global trend toward holding parent companies accountable for transnational harms. Nigerian law is therefore at a crossroads: whether to maintain a rigid adherence to Salomon or to adapt the doctrine in light of pressing environmental and social justice concerns. Legislative reform, judicial innovation, and stronger regulatory enforcement will be key to striking the right balance between corporate autonomy and accountability.

Footnotes

1. [1897] AC 22 (HL).

2. Ibid.

3. Companies and Allied Matters Act 2020, s 42.

4. See also section 43 which provides that except to the extent that the company's memorandum or any enactment otherwise provides, every company shall, for the furtherance of its business or objects, have all the powers of a natural person of full capacity.

5. (1986) LPELR-1839(SC).

6. (1992) 5 NWLR (Pt 240) 228 (CA).

7. (2022) LPELR-56867(SC).

8. CAMA 2020, s 672.

9. [2025] EWHC 1539 (KB).

10. Ibid.

11. Ibid.

12. [2021] UKSC 3, [2021] 1 WLR 1294.

13. Ibid.

14. Ibid.

15. Nwankwo M.C., ‘Transnational Corporate Liability and Environmental Justice: Lessons from the Ogale and Bille Cases' (2025) 12 Nigerian Journal of Environmental Law 45.

16. No. 6 2021.

17. No 25 2007.

18. Olufemi A., Corporate Social Responsibility, Human Rights and the Law: Multinational Corporations in Developing Countries (Routledge 2011).

19. Ibid.

20. Evaristus O., Regulating Transnational Corporations in Domestic and International Regimes: An African Case Study (University of Toronto Press 2009).

21. [2021] UKSC 3.

22. Petroleum Industry Act 2021 (Nigeria), ss 104–107.

23. Nigerian Code of Corporate Governance 2018, Principle 26

24. European Union, Corporate Sustainability Due Diligence Directive (Directive (EU) 2024/1760).

25. Ibid.

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