Section 36 of the Investment Promotion Act 1992 is the Authority’s enforcement power over certificates.
Section 36(1) — the grounds
(a) a foreign enterprise —
(i) obtained a certificate by fraud, misrepresentation, mis-statement or omission; or
(ii) is in breach of the terms or conditions of its certificate; or
(iii) is otherwise in breach of this Act; or
(b) a certificate issued to the owner of a foreign enterprise has been cancelled or suspended; or
(c) an enterprise which is, or is proposed to be, an owner, officer or business partner of the foreign enterprise, or which has an interest exceeding 10% of it, has —
(i) an unsatisfied civil judgment registered against it in a court in the country or elsewhere; or
(ii) been adjudicated bankrupt or insolvent, placed into liquidation, or had a receiver or receiver and manager appointed; or
(iii) been convicted of an offence punishable by imprisonment of one year or longer, or a fine of K10,000 or equivalent, whether in the country or elsewhere.
The two responses
(d) suspend the operation of the certificate, subject to such terms and conditions as the Authority considers appropriate; or
(e) cancel the certification from a date not less than 14 days from the date of the notice.
| Suspension — s 36(1)(d) | Cancellation — s 36(1)(e) | |
|---|---|---|
| Takes effect | On and from the date of the notice | Not less than 14 days from the notice |
| Terms | May be subject to conditions set by the Authority | — |
| Ends when | Revoked, cancelled, or overturned on appeal | Permanent — a new application is needed |
| Recorded | — | In the Register of Certificates — s 30(1)(b) |
Section 36(2) provides that a suspension takes effect on and from the date of the notice. There is no grace period, and the Act provides no requirement to hear the enterprise first.
Cancellation, by contrast, must take effect not less than 14 days from the notice. That window matters: the section 40 appeal to the Minister must be lodged within 20 working days of receipt of the notice, so an appeal can be filed before cancellation bites.
Section 36(2) — how a suspension ends
(a) the Authority revokes the suspension by written notice to the foreign enterprise; or
(b) the Authority cancels the certification; or
(c) the Minister exercises his powers under section 40(3) — that is, decides an appeal and gives directions to the Authority.
There is no maximum period. A suspension continues indefinitely until one of the three events occurs, which is why the appeal route in section 40 matters: paragraph (c) makes a ministerial decision on appeal one of only three ways out.
Grounds (b) and (c) — conduct of others
Ground (b) allows cancellation or suspension because a certificate issued to an owner of the enterprise has itself been cancelled or suspended — so enforcement travels up and down a corporate group.
Ground (c) reaches an owner, officer or business partner, or any enterprise with an interest exceeding 10%, that has an unsatisfied judgment, an insolvency history, or a qualifying conviction — anywhere in the world.
Two differences from the equivalent test at application stage are worth noting:
- Section 36(1)(c) applies a 10% interest threshold, where section 28(4A)(d) applies to any owner — and section 28(4B) treats ownership of any shares as ownership;
- Section 36(1)(c)(ii) has no ten-year limit on the insolvency ground, where section 28(4A)(d)(iii) is confined to the preceding ten years.
The practical consequence is that a certified enterprise must monitor its shareholders, officers and business partners on a continuing basis. A judgment entered against a foreign parent, or the liquidation of a joint venture partner, can put the certificate at risk.
Section 36(3) — temporary permission to wind up
The Regulations shall prescribe the manner in which the Authority may give permission to a foreign enterprise to carry on business temporarily for the purpose of winding-up, notwithstanding that its certificate has been cancelled or suspended.
Without it, an enterprise whose certificate is cancelled could not lawfully do the things winding up requires — collecting debts, paying creditors, terminating employees, disposing of assets — because each would be carrying on business without a certificate under section 41(1)(a).
Note that section 41(3)(c) separately places on the enterprise the burden of proving that it was carrying on business only for the purpose of winding-up its affairs. Permission under section 36(3) is the evidence that discharges it.
Where the enterprise is a company, winding up will also engage the Companies Act 1997 — see liquidation and, for an overseas company, what an overseas company must do.
If you receive a notice
- Note the dates. Suspension is immediate; cancellation takes effect no earlier than 14 days.
- Calculate the appeal deadline. 20 working days from receipt — see the appeal to the Minister.
- Identify the ground. Some are curable — satisfying a judgment removes ground (c)(i); remedying a breach addresses ground (a)(ii).
- Stop the affected activity. Continuing to carry on business under a suspended or cancelled certificate is an offence carrying K100,000 plus K10,000 a day, for the enterprise and its officers and owners.
- Seek winding-up permission under section 36(3) if the business must be closed out.
Sources
- Investment Promotion Act 1992 — ss 28, 30, 33, 36, 40, 41, 44
- Companies Act 1997; Insolvency Act (Chapter 253)
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.