While the Nigerian Stock Exchange (NSE) may have been established in 1960 as a private
mechanism for stock trading, its evolution over the years have seen it become the most reliable
public platform for stock trading in Nigeria. With this evolution, it now plays a more conspicuous
public service and function to existing and intending investors in the Nigerian stock market.
With this public service function the NSE has acquired, it has also acquired public responsibility
and has now gone beyond the days where it could legitimately claim to be a private institution
serving a solely private purpose. Indeed, this view was the rationale in the recent decision of the
Federal High Court in Lagos in the judgment of Honorable Justice A.O Faji delivered on the 1st of May 2018 in SUIT NO: FHC/L/CS/685/17-OWEI AYIBATONYE & ORS V. NIGERIAN STOCK
EXCHANGE, which has given judicial impetus to the applicability of the Freedom of Information Act to the Nigerian Stock Exchange.
FACTS
The Plaintiffs were investors who had lost substantial amounts of monies following an
investment in an unregistered investment product, referred to as the Partnership Securities
Deposit Account (PSDA) promoted by the Partnership Investment Company Limited (PICO) and
Partnership Securities Limited (the Partnership Entities). To fully understand the nature and
extent of the rights/reliefs of the Plaintiffs vis-Ã -vis the liability of the Partnership Entities, the
Plaintiffs had, relying on the Freedom of Information Act, requested for certain
information/documents, relating to the affairs of the relevant Partnership Entity from the
Nigerian Stock Exchange (the NSE). However, the NSE refused the Plaintiffs’ request for
information claiming the NSE is not subject to the Act and therefore not under any obligation to
honour the Plaintiffs’ request for information.
Aggrieved by the NSE’s decision, on the 28
th
of April 2017 the Plaintiffs filed an originating
summons before the Federal High Court Lagos, pursuant to Order 3 Rule 6 and 9 of the Federal
High Court (Civil Procedure Rules) 2009, seeking the determination of “Whether the Defendant
is a Public Institution within the meaning and intendment of Section 2(7) of the Freedom of
Information Act 2011” and praying the court for the following reliefs:
1. A DECLARATION that, by Section 2(7) of the Freedom of Information Act 2011, the
Defendant is a Public Institution within the meaning and intendment of the Freedom of
Information Act 2011.
2. AN ORDER directing the Defendant to deliver a copy of the Inspection Report(s) resulting
from and being a product of the Special Examination carried out by the Defendant on
Partnership Securities Limited and Partnership Investment Company Plc (the
“Suspended Companies”) between October and April 2017; (b) the report of any special
or routine examination carried out on any Suspended Companies by the Defendant
between the January 2008 and September 2016 (c) documents/records showing the
securities/shares currently in the portfolio of or owned by the Suspended Companies to
the Plaintiffs through their counsel within 24 hours from the date of delivery of the
judgement.
ARGUMENTS OF PARTIES
The Summary of the arguments of the Counsel to the Plaintiffs were:
1. That the Defendant provides regulatory services in the nature of public service or a
public function and ought to be declared a public institution within the meaning and
intendment of the Freedom of Information Act.
2. That by virtue of Section 13(c)(g)(i) and k of the Investment and Securities Act (ISA) the
Securities and Exchange Commission being the agency of government for regulating the
stock market by issuing the Defendant with licence to operate stock exchange has made
the Defendant a delegatee of its powers and thus a public institution.
3. That the Freedom of Information Act has the intendment of ensuring that members of
the public have access to information that is of sufficient public interest; this is
regardless of the nature of the persons in custody of the information. Section 2(7) of the
Freedom of Information Act on the meaning of Public Institution includes private
companies utilizing public funds, providing public services or performing public function
and the Defendant, by providing a public service comes within the applicability of the Act.
4. That the Defendant exercises regulatory powers and public interest’s standards by its
powers conferred under the Investment and Securities Act and other relevant laws and
where a private entity bears such rule making, enforcement and disciplinary powers over
other entities both public and private companies, such an entity must be held to provide
a public service or a public function within the intendment of the Investment and
Securities Act.
In defence, Counsel for the Defendants argued:
1. That the Plaintiff had a duty to prove the applicability of the FOIA to the Defendant and
2. AN ORDER directing the Defendant to deliver a copy of the Inspection Report(s) resulting
from and being a product of the Special Examination carried out by the Defendant on
Partnership Securities Limited and Partnership Investment Company Plc (the
“Suspended Companies”) between October and April 2017; (b) the report of any special
or routine examination carried out on any Suspended Companies by the Defendant
between the January 2008 and September 2016 (c) documents/records showing the
securities/shares currently in the portfolio of or owned by the Suspended Companies to
the Plaintiffs through their counsel within 24 hours from the date of delivery of the
judgement.
ARGUMENTS OF PARTIES
The Summary of the arguments of the Counsel to the Plaintiffs were:
1. That the Defendant provides regulatory services in the nature of public service or a
public function and ought to be declared a public institution within the meaning and
intendment of the Freedom of Information Act.
2. That by virtue of Section 13(c)(g)(i) and k of the Investment and Securities Act (ISA) the
Securities and Exchange Commission being the agency of government for regulating the
stock market by issuing the Defendant with licence to operate stock exchange has made
the Defendant a delegatee of its powers and thus a public institution.
3. That the Freedom of Information Act has the intendment of ensuring that members of
the public have access to information that is of sufficient public interest; this is
regardless of the nature of the persons in custody of the information. Section 2(7) of the
Freedom of Information Act on the meaning of Public Institution includes private
companies utilizing public funds, providing public services or performing public function
and the Defendant, by providing a public service comes within the applicability of the Act.
4. That the Defendant exercises regulatory powers and public interest’s standards by its
powers conferred under the Investment and Securities Act and other relevant laws and
where a private entity bears such rule making, enforcement and disciplinary powers over
other entities both public and private companies, such an entity must be held to provide
a public service or a public function within the intendment of the Investment and
Securities Act.
In defence, Counsel for the Defendants argued:
1. That the Plaintiff had a duty to prove the applicability of the FOIA to the Defendant and
2. AN ORDER directing the Defendant to deliver a copy of the Inspection Report(s) resulting
from and being a product of the Special Examination carried out by the Defendant on
Partnership Securities Limited and Partnership Investment Company Plc (the
“Suspended Companies”) between October and April 2017; (b) the report of any special
or routine examination carried out on any Suspended Companies by the Defendant
between the January 2008 and September 2016 (c) documents/records showing the
securities/shares currently in the portfolio of or owned by the Suspended Companies to
the Plaintiffs through their counsel within 24 hours from the date of delivery of the
judgement.
ARGUMENTS OF PARTIES
The Summary of the arguments of the Counsel to the Plaintiffs were:
1. That the Defendant provides regulatory services in the nature of public service or a
public function and ought to be declared a public institution within the meaning and
intendment of the Freedom of Information Act.
2. That by virtue of Section 13(c)(g)(i) and k of the Investment and Securities Act (ISA) the
Securities and Exchange Commission being the agency of government for regulating the
stock market by issuing the Defendant with licence to operate stock exchange has made
the Defendant a delegatee of its powers and thus a public institution.
3. That the Freedom of Information Act has the intendment of ensuring that members of
the public have access to information that is of sufficient public interest; this is
regardless of the nature of the persons in custody of the information. Section 2(7) of the
Freedom of Information Act on the meaning of Public Institution includes private
companies utilizing public funds, providing public services or performing public function
and the Defendant, by providing a public service comes within the applicability of the Act.
4. That the Defendant exercises regulatory powers and public interest’s standards by its
powers conferred under the Investment and Securities Act and other relevant laws and
where a private entity bears such rule making, enforcement and disciplinary powers over
other entities both public and private companies, such an entity must be held to provide
a public service or a public function within the intendment of the Investment and
Securities Act.
In defence, Counsel for the Defendants argued:
1. That the Plaintiff had a duty to prove the applicability of the FOIA to the Defendant and that the determining factor for the applicability of the Act to a private company is its
utilization of public funds: it is only where a private company utilizes public funds that it
can be held to be providing a public service or engaging in a public function. Therefore,
the Defendant was not a public institution and not within the provision of the FOIA.
2. As an alternative argument, Counsel to the Defendant submitted that assuming without conceding the Defendant is a public institution, it is not every request for information that can be granted under the Freedom of Information Act. Counsel referred to Sections 11, 12, 14-17 and 19 of the Freedom of Information Act and argued that the Act exempts the personal and financial information of individuals and third parties from being disclosed by a public institution.
3. Finally, Counsel submitted that the suit was an academic exercise, brought in bad faith with a sinister motive to mislead or deceive. He argued that the Defendant did not
generate the report in issue and is itself subject to the regulatory powers of the
Securities and Exchange Commission (SEC). The investigation was carried out by SEC to
whom the Plaintiffs' demand should have been directed and that the suit failed to
disclose any live issues for adjudication because the report was already within public domain. Counsel therefore asked the court to dismiss the suit.
In his reply the Counsel to the Plaintiff argued inter alia:
1. That it is possible for a private company to perform a public function by using its own
funds and it may be validly held to perform a public service without utilizing public funds.
2. That the Freedom of Information Act applies to private companies which utilize public
funds and to private companies who may not be utilizing public funds but are saddled
with a contractual, statutory or other responsibility to perform a public function or
perform a public service.
3. That the defence of private or third-party information does not apply under the Act when
there is public interest in the disclosure of such information.
JUDGEMENT OF THE COURT
Having considered the argument of Counsel on both sides the Learned trial Judge held as
follows:
1. On whether the Defendant is a public institution within the meaning of Section 2(7) of
the FOIA, having concluded that Section 2(7) has a disjunctive reading and the
requirement of rendering a public function is independent of the requirement of utilizing
public funds, the trial Court held:
“The Securities and Exchange Commission (SEC) has the power to set up Securities
Exchanges like the Defendant under Section 13(b) ISA. It also regulates the said
exchange under Section 13(g). In granting approval to register an exchange, the
Securities and Exchange Commission shall ensure that the interest of the public will be
served by the approval. The Exchange thus exists to serve the interest of the public. That
is a public function. See Section 29(3) of the ISA. Such a registration can be revoked if
the body corporate is operating in a manner detrimental to the interests of investors and
the public…The Defendant was thus established to carry out its activities in the interest
of investors and the public…On a literal interpretation of Section 2(7) Freedom of
information Act therefore, it seems to me and I hold that the Defendant is a public
institution and therefore subject to the Freedom of Information Act. I therefore answer
the question for determination in the affirmative and grant the declaration in relief 1.”
2. In holding that the Defendant can only be compelled to disclose information of dealing
members within its regulatory control the Court held:
“It is clear that Plaintiff has not disputed Defendants' position that since it has no
supervisory role as regards PICO then it cannot provide information about PICO, since it
obviously does not have such information in its capacity as a stock exchange. I therefore
find that even though Defendant is a public institution, it cannot produce what it does not
have. In so far as PICO is therefore concerned, the request for information cannot be
granted and is therefore refused in so far as the items sought are concerned.
3. On the defence of private interests and third party interests the Court held:
“I do not see any trade secrets, or commercial or financial information obtained from a
person in business that is proprietary, privileged or confidential the disclosure of which
may cause harm to third party interests. I actually think that disclosure of the
information will protect not only third parties (ie clients of PSL) but also other people
who are not aware of the steps taken with respect to PSL by NSE and Securities and
Exchange Commission. Disclosure will protect the interest of the general public”
The Court therefore concluded by granting both reliefs of the Plaintiffs and ordering the
Defendant to produce the information requested by the Plaintiffs under the FOIA.
IN CONCLUSION
The case of OWEI AYIBATONYE & ORS V. NIGERIAN STOCK EXCHANGE is therefore authority
(until contrarily decided by the appellate courts) on the position that:
1. Private Companies rendering public service as obligated under the provisions of law or
in exercise of powers delegated from a public institution, render public function and may
therefore come within the ambit of the applicability of the FOIA.
2. The Nigerian Stock Exchange is subject to application of the FOIA and an applicant can
request information from the NSE by enforcement of the FOIA, provided that:
a. The information is within the custody of the NSE.
b. The information is not one which the NSE is entitled to decline disclosure of.
No comments:
Post a Comment