LEGAL PRINCIPLE: COMPANY LAW — Receivership — Agency Relationship Between Debenture Holder and Receiver/Manager
PRINCIPLE STATEMENT
A receiver or manager appointed out of court under a power in any instrument is deemed to be an agent of the person on whose behalf he is appointed. If appointed manager of the whole or part of the undertaking, he stands in a fiduciary relationship to the company and must observe utmost good faith.
RATIO DECIDENDI (SOURCE)
Per Ejiwunmi, JSC, in Unibiz Nigeria Limited v. Commercial Bank Credit Lyonnais Ltd. (2003) NLC-152001(SC) at p. 7; Paras A–C.
"A receiver or manager of any property or undertaking of a company appointed out of a court under a power contained in any instrument shall, subject to section 393 of this Act, be deemed to be an agent of the person or persons on whose behalf he is appointed and, if appointed Manager of the whole or any part of the undertaking of a company he shall be deemed to stand in a fiduciary relationship to the company and observe the utmost good faith towards it in any transaction with it or on its behalf."
EXPLANATION / SCOPE
A receiver/manager is the agent of the debenture holder, not the company. The principle applies to company law. The receiver also owes fiduciary duties to the company. The rule clarifies the dual role. The court will enforce the agency relationship. The principle is well-established.